Accounts Receivable Management: How long are we actually going to continue financing our customers?
This is an uncomfortable question. And it hits a sore spot that you in accounts receivable know all too well. Every open item is more than just a number on the open items list. It is tied-up capital. It is deferred liquidity. And it is a risk that grows with every passing day.
In this article, we’ll show you how you can actively manage your liquidity by setting payment terms, consistently tracking open items, and utilizing the dunning process.
When payment terms become a bargaining chip
You know how it goes: The invoice is correctly prepared, sent on time, properly recorded, and the payment terms are correct—and yet the payment still hasn’t come through. From that point on, you’re not only faced with the collection process, but often also with having to explain, justify, and chase after the payment.
While the company may refer to it as “a slight delay in payment,” you see the business reality: the cash flow forecast is thrown off balance, payment streams shift, and investments may need to be reprioritized. What starts as an isolated incident quickly turns into a structural problem.
Unsettled items are no coincidence
When outstanding receivables rise and your reports show longer average payment terms, growing receivables, and possibly the first signs of bad debt provisions, the unspoken reality is clear: we’re covering the costs.
The problem doesn’t always lie with the customer. Often, it lies in the process. Dunning proposals are created but not consistently implemented. Items are set aside because responses are pending or “the relevant department is still reviewing them.” Sales doesn’t want to strain the business relationship. And so responsibility gradually shifts toward you—without it being clearly defined who actually makes the decision.
Debt collection is about management—not escalation
A professionally managed dunning process is not an aggressive tool. It is a management tool. Clear dunning stages, fixed intervals, and defined escalation procedures create transparency—both internally and externally.
When reminders are sent consistently, they strengthen your position. Payment terms are taken seriously. Outstanding items do not become a habit. And if consultation is actually necessary, it should be documented and clearly marked—not as a tacit suspension of the process, but as a conscious decision with clear follow-up.
The other side: Discount losses are losses in earnings
Liquidity is not just an accounts receivable issue. The flip side of this trend is evident in accounts payable. Delayed incoming payments increase pressure on outgoing payments. Cash discount periods expire because liquidity must be conserved or internal approvals take too long.
A two or three percent discount may seem manageable in individual cases. Taken together, however, they represent a significant contribution to earnings. Every missed discount is an immediate, measurable loss—and usually not a technical problem, but a process problem.
Your role: Actively managing liquidity
Every day, you navigate the tension between outstanding receivables and incoming payments. Between dunning stages and discount periods. Between sound business judgment and operational constraints.
You're not just an accountant. You manage cash flow.
Outstanding accounts are not a side issue in day-to-day operations. They serve as an indicator of how strictly payment terms are adhered to within the company. And the collections process is not an automatic procedure, but a tool for ensuring financial stability.
The key question, therefore, is not simply whether a debtor will pay. It is whether your company consistently follows through on collecting what has been agreed upon. After all, liquidity does not come from hope. It comes from clear processes, defined responsibilities, and consistent implementation. That is precisely where your room for maneuver begins.
Our conclusion: Use receivables management in BC
Effective accounts receivable management doesn’t end with a reminder—it starts in the system.
In Microsoft Dynamics 365 Business Central, the entire process can be mapped out in a transparent and traceable manner: from clearly defined payment terms to customizable reminder levels and interest calculations, all the way to the automated generation of reminder proposals.
Open items can be analyzed at any time, overdue accounts can be organized by age, and labels such as “Hold” can be used strategically—but with clear documentation and tracking.
What matters here is not just the technical setup, but consistent use. When dunning cycles are carried out regularly, responsibilities are defined, and reports are actively utilized, the system transforms from a booking tool into a management instrument. This is precisely where receivables management comes into its own: not reactively, but in a structured and forward-looking manner.
Would you like to keep track of your receivables and get the most out of BC?
Then it’s worth taking a closer look at the basics: payment terms, dunning stages, and clear processes in accounts receivable management. When these are properly set up, you can identify overdue receivables early on and respond in a structured manner—instead of playing catch-up.
In our finance workshop “Accounts Receivable & Accounts Payable,” we’ll explore together how the interplay between payment terms and dunning stages works optimally, enabling you to successfully manage receivables and payables.
Learn more about our finance workshop, “Accounts Receivable & Accounts Payable.”
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About the author
Sabine Wigges · Functional Lead Consultant
My journey into the world of ERP began in day-to-day operations before I transitioned to consulting in 2019.
Today, I help companies map their processes in Microsoft Dynamics 365 Business Central in a structured way, always keeping the big picture in mind.
My focus is on clear system logic, transparent workflows, and business management. It is important to me that everything makes sense, remains verifiable, and can be analyzed. Liquidity, payment terms, dunning, and cash discount management are not secondary processes to me, but rather key levers for stability and profitability.
I combine operational experience with a consulting perspective. I know where the bottlenecks lie in day-to-day operations and how to address them in a structured and sustainable way.
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