--- name: collections-management description: Prioritize and automate accounts receivable collections activities to maximize cash recovery while preserving customer relationships. Use when managing overdue invoices, setting up automated collection workflows, negotiating payment plans, handling disputed invoices, writing off bad debt, or monitoring DSO trends. Triggers on phrases like "collections", "overdue invoice", "past due", "DSO", "days sales outstanding", "payment plan", "bad debt", "write-off", "collections workflow", "AR aging", "customer payment follow-up". --- # Collections Management Systematically collect overdue receivables through automated reminders, smart prioritization, and relationship-preserving escalation strategies. ## Workflow ### Collections Process Pipeline Trigger: Daily AR aging review with automated collection activities: 1. **AR aging analysis**: - Generate current AR aging report by customer and invoice - Bucket: Current, 1-30, 31-60, 61-90, 91-120, 120+ days past due - Calculate total exposure by bucket - Trend analysis: compare to prior month and quarter 2. **Customer risk scoring**: - Score each customer by: payment history, credit rating, account health, relationship value - Risk tiers: Green (low risk), Yellow (monitor), Orange (action needed), Red (critical) - Dynamic scoring: update after each payment or interaction - Flag new customers and first-time late payers differently 3. **Collections prioritization**: - Priority matrix: amount x days overdue x risk score - Top collection targets identified automatically - Balance between high-value accounts and many small overdue items - Resource allocation: senior collectors for high-value strategic accounts 4. **Automated dunning workflow**: - Reminder 1: 3 days before due date (friendly reminder email) - Reminder 2: 1 day past due (gentle reminder with payment link) - Reminder 3: 7 days past due (firm reminder with invoice details) - Reminder 4: 15 days past due (escalation notice) - Reminder 5: 30 days past due (final notice before escalation) - Customizable frequency and tone by customer segment 5. **Personal collection outreach**: - Phone call scripts for accounts > 30 days past due - Account-specific context provided to collectors - Payment arrangement negotiation framework - Documentation of all collection interactions - Escalation to management for strategic accounts 6. **Dispute resolution**: - Categorize disputes: pricing, quantity, quality, delivery, duplicate charge - Route to appropriate department for resolution - SLA: resolve disputes within 5 business days - Partial payment acceptance while dispute resolves - Credit memo issuance when dispute validated 7. **Payment plan management**: - Offer structured payment plans for accounts unable to pay in full - Standard plans: 30, 60, or 90-day installment options - Custom plans for enterprise accounts with CFO approval - Automated tracking of payment plan compliance - Re-escalation if payment plan breached 8. **Write-off and bad debt management**: - Write-off criteria: age > 180 days, customer bankruptcy, uncollectible - Approval hierarchy for write-offs by amount - Tax impact analysis of write-offs - Continued collection effort even after write-off (if cost-effective) - Charge-off recovery tracking ### AR Aging Summary ``` AR AGING REPORT — January 15, 2025 ════════════════════════════════════ TOTAL GROSS RECEIVABLES: $12.4M AGING BUCKET AMOUNT % OF TOTAL TREND ──────────────────────────────────────────────────────── Current (0-30 days) $8,920,000 71.9% ↑ 1-30 days past due $1,850,000 14.9% → 31-60 days past due $980,000 7.9% ↑ ⚠ 61-90 days past due $420,000 3.4% ↑ ⚠ 91-120 days past due $150,000 1.2% ↓ 120+ days past due $80,000 0.6% → KEY METRICS: DSO (Days Sales Outstanding): 38 days ⚠ Target: 30 days Collection Effectiveness Index: 87.2% ⚠ Target: 92% % Gross AR > 60 days: 5.2% ⚠ Target: <4% TOP 10 OVERDUE ACCOUNTS: 1. TechCorp Inc. $245,000 | 67 days | Risk: Orange 2. Global Retail Co. $198,500 | 45 days | Risk: Yellow 3. StartupXYZ LLC $156,200 | 89 days | Risk: Red 4. Enterprise Solutions $134,800 | 38 days | Risk: Yellow 5. MediaGroup Corp. $98,400 | 52 days | Risk: Orange ``` ## Templates ### Automated Dunning Email Templates ``` REMINDER 1 — 3 Days Before Due Date ═════════════════════════════════════ Subject: Upcoming Invoice Due: #[InvoiceNumber] Hi [Customer Name], This is a friendly reminder that invoice #[InvoiceNumber] for $[Amount] will be due on [Due Date]. You can view and pay your invoice here: [Payment Link] If you have any questions about this invoice, please don't hesitate to reach out. Best regards, [Company] Accounts Receivable Team --- REMINDER 3 — 7 Days Past Due ══════════════════════════════ Subject: Past Due Invoice: #[InvoiceNumber] — $[Amount] Hi [Customer Name], Our records show that invoice #[InvoiceNumber] for $[Amount] was due on [Due Date] and is now 7 days past due. Invoice Details: Invoice #: [Number] Amount: $[Amount] Due Date: [Date] Days Overdue: 7 Please remit payment at your earliest convenience: [Payment Link] If payment has already been sent, please disregard this notice. If you have questions or need to discuss payment arrangements, contact us at [email/phone]. Best regards, [Company] Accounts Receivable Team --- REMINDER 5 — 30 Days Past Due (Final Notice) ════════════════════════════════════════════ Subject: FINAL NOTICE — Overdue Invoice #[InvoiceNumber] Hi [Customer Name], Your account has an outstanding balance of $[Amount] that is now 30 days past due. Outstanding Invoices: #[InvoiceNumber] $[Amount] [Days] overdue #[InvoiceNumber] $[Amount] [Days] overdue TOTAL: $[Total] Please note that failure to resolve this balance within 10 business days may result in: - Suspension of service/shipments - Account placement with a collection agency - Impact on your credit terms We value your business and prefer to resolve this amicably. Please contact our collections team immediately at [phone]. Regards, [Company] Finance Department ``` ### Payment Plan Agreement Template ``` PAYMENT PLAN AGREEMENT ══════════════════════ Customer: [Name] Account #: [Number] Total Balance: $[Amount] Agreement Date: [Date] PAYMENT SCHEDULE: Installment 1: $[Amount] — Due [Date] Installment 2: $[Amount] — Due [Date] Installment 3: $[Amount] — Due [Date] TERMS: - Payments must be received by the due date - Any missed payment voids this agreement - Future invoices remain due per standard terms - Service status: □ Active □ Suspended until balance cleared APPROVAL: Customer authorized by: [Name/Title] Finance approved by: [Name/Title] ``` ## Edge Cases - **Strategic enterprise accounts**: Custom collection approach preserving relationship; involve account manager; consider extending terms vs aggressive collection - **International collections**: Different legal frameworks; cross-border payment issues; currency and FX considerations - **Government/public sector**: Longer payment cycles by design; follow statutory payment timelines; political sensitivity - **Disputed amounts**: Separate undisputed portion for immediate payment; fast-track dispute resolution; document all communications - **Customer financial distress**: Early warning signs monitoring; proactive engagement; consider reduced terms or secured payment - **Recurring billing failures**: Failed payment retry logic; update card on file; fall back to manual payment methods - **Seasonal customers**: Adjust collection expectations during known slow periods; pre-agree payment schedules ## Integration Points - ERP/GL (NetSuite, SAP): AR sub-ledger, aging reports, payment posting - CRM (Salesforce): Customer relationship context, account manager info - Payment gateways (Stripe, Adyen): Payment processing and retry logic - Email systems: Automated dunning communication - Credit bureaus: Customer credit scoring updates - Collection agencies: External collection handoff - BI tools: DSO dashboards and collection metrics ## Output ### Collections Performance Dashboard ``` COLLECTIONS PERFORMANCE — January 2025 ══════════════════════════════════════ RESULTS: Total collected this month: $4.2M Target collection: $4.5M Collection rate: 93.3% ✓ Above target (90%) Cash applied: $4.0M Unapplied cash: $0.2M DSO TREND: Current month: 38 days ⚠ Prior month: 36 days 3-month avg: 37 days Target: 30 days AGREEMENT SUCCESS: Payment plans active: 12 Payment plans compliant: 10 (83%) Payment plans defaulted: 2 WRITE-OFF ACTIVITY: Write-offs this month: $18,500 Write-off rate: 0.15% ✓ Below threshold (0.5%) Recovered write-offs: $8,200 NEXT MONTH FOCUS: - 3 accounts approaching 90-day threshold - TechCorp payment plan renewal due - Seasonal adjustment expected for retail segment ```