To assist in new customer set up, Freedom Series/ec21 allows you to record a default credit limit that is used to establish a credit limit for a new customer if the credit limit is not entered in the customer record. This is very useful in setting up a new customer quickly, pending a full credit investigation.
Monitoring Accounts
Freedom Series/ec21 provides a number of reports and on-line inquiries that are used in credit management. The Customer Credit Inquiry is one of the inquiries most frequently used for monitoring customer credit worthiness. This inquiry displays the:
- Date the account was opened,
- Customer's current balance,
- Customer's credit limit,
- Customer's highest balance ever with month and year,
- Customer's highest balance in the current year,
- Number of invoices issued to the customer year-to-date,
- Customer's sales year-to-date,
- Customer's prior year sales,
- Value of current open orders,
- Customer's current account aging,
- Credit manager assigned to the account,
- Customer's telephone number,
- Date of the last credit review,
- Current and previous D & B rating of the customer,
- Date of the last invoice,
- Date of the last payment,
- Average days late this year,
- Weighted average days late since the account was opened,
- 24 month rated payment history.
As you can see this one display presents a complete picture of your experience with the customer. This display will become invaluable to your credit management team when assessing a customer's credit worthiness.
Credit (Payment) Terms
Another basic tool of credit management is the terms of sale you offer your customers. Freedom Series/ec21 supports all the credit terms common to the distribution industry plus some not so common. You can build any number of different credit terms, the basic elements of which are the due date, the discount amount and the discount date. You can also build split terms where the total due is split over any number of due dates, each with discounts if you wish. Freedom Series/ec21 also supports anticipation discounts for early payment of the invoice.
Due Date, Discount Date, and Discount Amount
Freedom Series/ec21 allows you to set due dates and discount dates as a number of days following the invoice date, a specific date in the future, a number of days following the end of a month (which can be used in conjunction with a prox cut off), or as the invoice date plus a number of months. The discount amount is set as a percentage of the invoice total.
Using Credit Terms
Each sales order carries its own credit (payment) terms. Freedom Series/ec21 allows you to set sales location default terms to use for sales orders. You can also set a term to use for a particular customer (COD for example) which will override the sales location default. The term can also be changed by terms associated with a customer contract or a promotional offering. It is also possible to manually set the terms during sales order entry. One of the unique features of Freedom Series/ec21 is the ability to change the terms of a sales order after it has been invoiced. This gives you the ability to correct errors without having to credit the invoice and reissue it.
Freight Discounts
Cash discounts offered for prompt payment of an invoice are calculated on the invoice total. Freedom Series/ec21 offers an alternative to this normal type of cash discounting, called freight discounts. A Freedom Series/ec21 freight discount is a discount of the freight portion of the invoice as an incentive for early payment. This feature is often used by distributors who wish to make an offering that gives the customer an additional incentive for early payment or as an alternative to normal cash discounting that limits the size of the discount.
Sales Order Processing and Credit Management
There are a number of actions that you can instruct Freedom Series/ec21 to take during sales order processing to enhance your credit management. These actions include various credit checking options, handling credit card and COD orders, and special features for the handling of prepaid orders.
Credit Checking
Freedom Series/ec21 credit checking is based on a code set for each customer. This code instructs Freedom Series/ec21 which credit checking method to use for the customer. The standard credit check is done by comparing the customer's credit limit to his current A/R balance plus the value of his open orders. Freedom Series/ec21, however, allows you to build credit checking methods other than the standard without requiring you to have a knowledge of programming. You could, for example create a credit checking method that looks at the aging of the customer's balance or the last credit review date.
Credit Hold Sales Orders
If a sales order fails credit checking, you can instruct Freedom Series/ec21 to report that condition to you and take no other action. More common however, is to instruct Freedom Series/ec21 to hold orders for your review if they fail credit check.
Releasing Credit Hold Orders
Freedom Series/ec21 informs you, during sales order entry, if an order is going to be placed on credit hold. Additionally, both an on-line inquiry and hard copy report are available to inform you of orders on credit hold.
Freedom Series/ec21 provides a special on-line function for releasing credit hold orders. You can assign different credit managers to different groups of customers, and have the release function set to only display the held orders for a particular credit manager. This function allows you to view the sales order detail, the customer's credit history display, and the customer's current A/R detail. The release of the sales order is simple but protected by a password that is set and controlled by the credit manager.
Splitting Held Orders
Another tool available when dealing with held orders is Splitting Orders, allowing a portion of the order to ship while holding back the balance. Customers appreciate that your are able to work with them and release critical items while you are still in a position of holding shipment of the balance until credit issues are resolved.
Credit Cards
Freedom Series/ec21 can be set to accept credit cards as the form of payment. You are prompted to enter the credit card number and expiration date during sales order entry. You are even allowed to accept more than one card and indicate the amount to be charged to each card.
Credit Card Approval
Freedom Series/ec21 provides for either manual or electronic approval and settlement of your credit card transactions. Which ever best suits your environment.
Freedom Series/ec21 provides a complete solution for electronic processing of charge cards. Approvals, rejections and settlements are handled by the system via electronic transmissions with your financial institution.
Unless an approval code is entered at the same time as the credit card information, Freedom Series/ec21 places sales orders with credit card payment on hold. A report can be produced as often as you like that lists all credit card orders, sorted by card issuer, with the necessary information displayed to obtain approval from the credit card issuer. This report includes a space to record the approval code received for each order.
Releasing orders on hold pending card approval is quick and easy. Freedom Series/ec21 displays the orders on credit card hold, you select the order and enter the approval number, then Freedom Series/ec21 releases the order for normal processing.
Prepaid Sales Orders
If, in your type of business, you receive payment by cash or check with the order from your customer, Freedom Series/ec21 provides the processing options to smoothly handle these orders. You can enter the payment information as part of the sales order and have this information automatically flow to Accounts Receivable along with the invoice information. The account is automatically offset, so you don't have any posting tasks.
Over and Short Payments
It is common for customers to figure order totals inaccurately, and therefore, for their prepayments to be over or short the actual amount. To overcome this problem Freedom Series/ec21 can be instructed to automatically create a COD for the amount of any short fall in the prepayment. Additionally, Freedom Series/ec21 can be set so that the necessary transactions are created and posted in Accounts Payable to cause a refund check to be issued for any over payment.
Collections
Freedom Series/ec21 provides you with several on-line tools and reports to support your collections effort. These facilities are designed to provide you with the information you need as well as manage the collection tasks.
Credit Managers
Freedom Series/ec21 allows you to assign each customer to a credit manager. As used here, the term credit manager simply refers to the person charged with the responsibility for the credit and collections efforts associated with a group of customers. This feature is for companies who have credit and collections activities centered at the branch level or, because of the number of customers, assign account responsibilities to different individuals. Freedom Series/ec21 credit and collection displays and reports can be for a particular credit manager so that only the information that pertains to their accounts is provided.
Receivables Aging
When delivered to you, the Freedom Series/ec21 default receivables aging is based on invoice due date. It ages invoices as future (due more than 30 days in the future), current (due 30 days or less in the future), past due 1, 30, 60, or 90 days. You can, however, change the default settings for the past due days and thereby change the aging columns used on displays and reports.
Displays that report aged receivable balances allow you to display the aging based on due date or invoice date. Additionally, you can change the aging days for each column on the fly and Freedom Series/ec21 will re-age the balances for you immediately. These on-the-fly changes to the aging columns affect the display only during the current operating session. If you exit the inquiry function and reenter, the aging returns to your default settings. This same option to allow on-the-fly changes to the aging columns is available for many reports. This feature is particularly useful to zero in on accounts within a specific date range.
Online Inquiry
There are two inquiries into a customer's accounts receivable detail most often used in collections--A/R Item Inquiry By Customer and On-line Customer Aging. These inquiries provide two different views of the customer's A/R and both provide access to the Customer Credit Inquiry. Additionally, you can attach notes to an invoice while performing an inquiry.
A/R Item Inquiry By Customer
This inquiry is very useful because of two unique features. This first is the ability, on-line, to limit the selection of A/R items displayed. When initially invoked, all open A/R transactions are displayed along with the terms of each invoice. You can then choose to display closed items instead, or to limit the display to certain items by transaction code. You can choose to only display COD, Credit Card, Cash, Prepaid, or On Account invoices, or some combination of these, and to limit the display to items on a particular date or within a date range. You can also limit the items displayed based on the credit (payment) terms. Finally, you have the option to display the terms, sales order number or customer purchase order number associated with each invoice.
The second feature of this inquiry that makes it so useful to your collections people is the quick and easy display of invoice detail. By placing the cursor on a line of the display and pressing a Function Key, Freedom Series/ec21 immediately displays the invoice detail associated with that display line.
These two features combined give your people the access they need to quickly identify invoices based on information supplied by the customer, which can often be incomplete. When a customer calls with a problem or when you call to collect a past due invoice, this kind of quick and easy access to information helps insure accurate communications with the customer.
On-line Customer Aging
This inquiry displays all open items in ascending due date order with each item aged based on the default aging you set up, and you can change the aging criteria as needed. This inquiry is most often used to identify those invoices that you wish to target for collection.
Collections Reporting Tools
Freedom Series/ec21 includes three reports to aid you in your collections efforts: the Aged Trial Balance, Customer Statements, and Dunning Notices. Each is designed to give you the information you need to identify problem accounts, encourage prompt payment, and provide the customer with needed information.
The Aged Trial Balance
The Freedom Series/ec21 Aged Trial Balance report is designed to allow you, each time you run the report, to select the information that will appear on the report and the sequence in which it will be presented. These sort and selection options are provided so that you can use the basic report in a number of different ways to assist in the collections effort. Each of the run time options for the Aged Trial Balance are discussed below.
As of Date
This option defaults to today's date but can be set to any date in the past. Only Open A/R items posted on or before the As of Date are present on the report. This option could be used to identify open/unpaid invoices that are more than 120 days old, for example, for special collections attention.
Aged As of Date
This option also defaults to today's date, but can be set to an earlier date. Freedom Series/ec21 uses this date and the item's posting date to determine the aging column in which the item will appear. You may want to adjust this date so that the aging is as it was at the end of the previous month, for example, to match the aging on end of month customer statements.
Overdue Columns
The Aged Trial Balance uses six aging columns: Future, Current, and four Past Due columns. Future and Current are system defined. The four Past Due columns are set to the aging defaults you control. Each time you run the Aged Trial Balance, you are given the opportunity to change the default Overdue Columns to values other than your defaults. You may change these values to highlight accounts or items with serious past due problems, for example, by setting the fourth or oldest column value higher than your default.
Customer Detail and Customer Totals
The default settings for these run time options will cause the Aged Trial Balance to present customer totals only, without detail, but you can change these settings to include detail items for a customer as well.
Sequence
This option determines the order in which the selected information will appear on the Aged Trial Balance report. There are six options: by Customer Name in Alphabetic order, by Branch, by Credit Manager, by Sales Manager, by Credit Code, or by Salesman. Besides sequencing the report in the selected manner, Freedom Series/ec21 also subtotals the aging for each change in the selected sequence value. For example, if Customer Detail is set to 'N', Customer Total set to 'Y', and the sequence is set to Salesman, the resulting report would present one line for each customer assigned to a particular Salesman. Sub-totals for the Salesman are calculated. Then a new page would be begun for the next Salesman.
Overdue Accounts Only
If you select this option, only those accounts with a Past Due balance will be presented on the report.
List Only
The Aged Trial Balance normally presents information about all accounts in A/R. Using the List Only option you can narrow the displayed information to a single Account, Branch, Sales Manager, Credit Manager or Market Type. (Market Type is a code on the customer file used to group customers of similar characteristics. See the section on Sales and Customer Service for a further discussion of Market Type.)
Include/Omit
If you elect to display Customer Detail, this option gives you the ability to narrow the invoices presented to one or more specific types. The choices you have are: On Account invoices, COD invoices, Prepaid invoices, Cash invoices, Charge Card invoices. Initially, the Aged Trial Balance is set to include all of these. You may choose to omit or include each as suits your current purpose for running the report.
Aged Trial Balance Flexibility
By using these various run time options for the Aged Trial Balance, you can produce a number of different reports for different purposes. Besides the traditional Aged Trial Balance that presents every account, you can produce a report for use by your salesman to support the collection effort, or a report to identify seriously past due accounts or individual invoices. The Freedom Series/ec21 Aged Trial Balance, because of its flexibility, will become one of your major collection tools.
Customer Statements
The Freedom Series/ec21 customer statement is formatted during the installation process to be identical to the statement you currently provide your customers. Using the same format should limit the impact of the switch to Freedom Series/ec21 on your customers and help avoid any disruption to cash flow that a change in statement format might cause.
Freedom Series/ec21 supports producing customer statements on a cycle, if you choose, instead of producing all the statements at the same time. Many distributors have found that by grouping customers and producing statements throughout the month, cash flow improves and your are able to distribute work loads more evenly. You could, for example, place customers in three groups or cycles, then produce statements for the first group at the end of the month, the second on the 10th, and the third on the 20th.
Dunning Notices
Freedom Series/ec21 Dunning Notices are a very flexible and powerful feature for collections. Freedom Series/ec21 allows you to create any number of form letters to use for dunning notices. Many credit managers develop a set of dunning notices, progressively stronger in tone and content. You are able to edit, copy and delete these 'form' letter dunning notices as required and to develop dunning notices targeted at specific customers or groups of customers. Each dunning notice normally includes a list of invoices for which you are requesting payment. This list is produced each time you request Freedom Series/ec21 to produce dunning notices.
Once the various form letters are built, producing dunning notices is very simple. Freedom Series/ec21 prompts you to select which dunning notice format to use and to enter information from which the system selects the invoices to list on the dunning notices. This information you enter as part of your request includes the number of days late an invoice must be for inclusion on the dunning notice, the minimum total past due from a customer before they receive a dunning notice, and the minimum invoice amount that will appear on a dunning notice. These control features insure that only real offenders of your credit terms receive dunning notices, not your good customers with a minor problem.
Customer Returns and Credit Memos
Freedom Series/ec21 provides a closed-loop system for handling customer returns and issuing credit memos. The process begins with your entry of a Return Merchandise Authorization (RMA). The RMA entry is very similar to sales order entry, but also includes the ability to view invoices that have been issued to the customer and the ability to pick the item(s) that should be included on the RMA. You can also manually enter items on the RMA.
For each item entered on the RMA, you indicate a return reason code. This code must exist in a table that you build in Freedom Series/ec21. The return reason code controls the general ledger account numbers that will be used when the credit memo is posted to general ledger and determines whether inventory will be updated by the return.
You can indicate during RMA entry that the RMA requires management approval before the customer is instructed that the items can be returned. Freedom Series/ec21 produces a report of all RMA's that have been entered but are pending approval. The person with approval authority uses this report to identify the RMA's that need approval. There is a special on-line function provided for the review and approval of RMA's that is password protected. Freedom Series/ec21 also produces a call back report that lists those RMA's that have been approved by management. This report is used as a reminder to call the customer with shipping instructions once the RMA is approved.
Those RMA's not requiring approval are released immediately after entry is completed. A released RMA is ready for further processing. If merchandise is being returned, the RMA functions like a PO in that merchandise can be received against it. RMA's are billed in a manner very similar to billing of sales orders. The result of billing an RMA is the issue of a credit memo to the customer.
Analyzing Customer Returns
The Sales Analysis system includes a special report writer specifically for analyzing Customer Returns. This report writer allows you to focus on returns by location or company wide, by customer, by salesman, by merchandise category, by item, by reason code, for any time period, in detail or summarized. You could, for example, produce a report summarized by reason code by customer for each salesman to determine which customers have a higher return rate. Or you could produce a report by vendor to determine if there are vendors with unusually high return rates, then narrow the report to items supplied by suspect vendors. The Customer Returns Report Writer can be an invaluable tool supporting your efforts to improve quality and reduce returns.
Handling Disputed Items
Freedom Series/ec21 provides you with the ability to place individual invoices in or be removed from disputed status. While an invoice is in disputed status, it is clearly marked as disputed on all displays and reports, it ages as a future item, and it is exempt from finance charges.
Using COD to Collect Past Due Accounts
It is a common practice among distributors to place a customer on COD only while trying to collect past due invoices. Continuing to do business with such a customer for a number of reasons, but fear that cutting the account off completely will make collecting the money due impossible is a common reason.
Freedom Series/ec21 provides you with a tool that causes a portion of money due from an account to be added to each COD order processed for the customer. In other words, each time the customer places a new order, the COD amount is the sum of the invoice plus a portion of the balance due on the old invoices on account.
The A/R Note Pad
Freedom Series/ec21 provides a convenient note pad to record the important notes about your collection efforts. Notes of any length can be entered and are associated with the person who enters the note, as well as a customer or even a particular invoice. Notes can also carry a reminder date.
The A/R Note Pad gives your collections people a place to record customer promises, comments about disputed invoices, and follow-up actions that need to be taken. When working with a delinquent customer, you have a complete history of collections efforts and the results. Each day Freedom Series/ec21 will display the actions that you have scheduled for that day, including reminders to check on promised payments.
With the Freedom Series/ec21 A/R Note Pad available, you will eliminate hand written notes, missed follow-up actions, or an incomplete record of collection efforts.
Finance Charges
Freedom Series/ec21 can be set to apply finance charges to past due invoices. You are provided with complete control of this process. First, Freedom Series/ec21 allows you to set your normal finance charge policy, which can vary by company location. You can set a grace period before finance charges will be applied and specify the rate. You can also apply a different rate to a particular customer or exempt the customer entirely. And, as was mentioned earlier, disputed invoices are exempt from finance charges.
Freedom Series/ec21 also provides a number of tools to help you manage finance charges. First, you can produce a report that lists, by customer, each invoice to which finance charges will be applied. This report can be used to insure that finance charges will be applied appropriately. You can then place in disputed status any items that should be exempted from finance charges. Freedom Series/ec21 also provides a Finance Charge Analysis report that allows you to see which customers are paying finance charges and which are not.
Cash Application
The Freedom Series/ec21 Cash Application function is fast, flexible and simple to use. It's design supports secure cash handling procedures. With Freedom Series/ec21, you will be able to apply cash to customer accounts in less time, with fewer errors and with fewer people, freeing up your personnel for more productive credit and collection activities.
Freedom Series/ec21 provides for either manual or electronic creation of cash batches. Batches can be created in-house manually or created automatically by electronic files from your financial institution.
The Bank Deposit
The first step in Freedom Series/ec21 cash application is the preparation of the bank deposit. You begin deposit preparation by entering the total of the deposit and the number of checks received. This deposit is assigned a batch number for identification. For each check you receive, you enter the amount and check number. You typically associate the check with a customer, but you can enter a specific invoice or list of invoices instead. Freedom Series/ec21 ensures that the individual checks entered total to the deposit amount you enter when you begin this function. Freedom Series/ec21 will also print a deposit slip that lists the individual checks.
When a deposit batch has been completed and verified, the amount received from each customer appears in a special field, In Deposit. This lets your collection people know that a payment has been received even before it is applied to specific invoices. Also, this In Deposit amount can be used to reduce a customer's A/R balance for credit checking purposes.
Non-Accounts Receivable Cash
During the bank deposit preparation function, you can indicate that a check received is not in payment of receivables invoices. For this type of check, you are given the opportunity to enter the general ledger account to which the funds should be credited.
Applying Cash
The Freedom Series/ec21 Cash Application function is started by entering the deposit batch number you wish to apply. In response, Freedom Series/ec21 will display the first customer's A/R detail ready for you to apply the check. When you complete the application of a check, Freedom Series/ec21 will present the next customer's A/R detail. Freedom Series/ec21 presents each customer that was included in the deposit, in turn, until each check in the deposit has been handled.
There are two basic ways, and therefore two different displays, provided to apply cash. Both displays used in cash application display the check amount, the amount applied, the discount allowed and the remainder to be applied.
The initial display, Open Items by Due Date, allows you to select the items being paid and allows you to indicate if discounts are to be allowed. The alternate display is the Remittance display. This function allows you to enter the items being paid, along with the amount and discount if any, or to edit entries selected on the Open Item display. The Remittance display also allows you to enter freight discounts, make adjustments to the account, or even split part of the check to a different customer account. Freedom Series/ec21 allows you to switch back and forth between the Open Item and Remittance displays while applying a check.
Open Items can be displayed by invoice number, in due date order, by invoice amount, and several other ways. A pop-up calculator is provided for math calculations. Freedom Series/ec21 prompts you to handle the entire amount of the check before letting you post the application to Accounts Receivable. An amount can be, however, posted as On Account instead of to a particular invoice.
Accounts Receivable Adjustments
Freedom Series/ec21 allows you to define the different types of adjustments that will be allowed. You have control of the general ledger accounting of each adjustment type you create. Once these adjustment types are set up, they become available for use during cash application or in a separate function used to post adjustments.
There is special type of adjustment that you can create for charge backs. This special adjustment will post the adjustment, but then create a charge back item in the account's A/R detail. Additionally, Freedom Series/ec21 can be instructed to produce an invoice for the charge back. This facility is most often used when a customer short pays an invoice without identifying a reason. You can post the payment, adjust the amount of short pay so that the invoice is paid in full, but then charge back the amount of the short pay creating a new A/R item and invoice to send to the customer.
Another special type of adjustment, Refund Adjustments, is linked with the Freedom Series/ec21 Accounts Payable System. Refund Adjustments will automatically create the necessary transactions in Accounts Payable to cause you to issue a refund check for the amount of the adjustment.
Invoice Transfers
A unique feature of Freedom Series/ec21 is the ability to transfer an invoice from one customer account to another. This compares to most accounts receivable systems that would require you to credit the invoice against one account and re-bill the invoice to the correct account.
Applying UPS Checks for CODs
As you know, if you use UPS for COD's, the check you receive from UPS only identifies the items the check covers by their COD Tag Number. The Freedom Series/ec21 Warehouse Management function allows you to enter these COD Tag Numbers associated with each order when they are shipped. If COD Tag Numbers are entered when the order is shipped, Freedom Series/ec21 provides you with a special function during cash application to enter these COD Tag Numbers and the amount associated with each. Freedom Series/ec21 will find the invoices being paid for you and present them for your confirmation.
Electronic Deposit Processing
This facility produces a tape, for use by your bank, containing the necessary information for the bank to process and deposit in your account credit card transactions. This facility saves you the time of producing the necessary information and improves the speed at which the bank credits your account. It also reduces errors caused by people when doing this function manually.
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