Long Business Systems, Inc. (LBSI) is a technology services firm focused on improving profitability and customer service through effective payment processes. The document outlines the dunning process, emphasizing the importance of timely customer interactions and the establishment of a consistent invoicing procedure to minimize accounts receivable days and enhance cash flow. It provides practical steps for order review, billing, and dunning letter generation to ensure effective communication with customers regarding overdue payments.

1. Long Business Systems, Inc. (LBSi)
LBSI is a technology services firm that understands technology is a tool
that enables you to grow profitably, outpace the competition and provide
better service to your customers.
Cleveland – Columbus – Cincinnati - Pittsburgh

2. LBSi Whistle Stop Tour
Topic: Dunning Process
Presented by: Vicki Smith
Dunning Process helps you monitor customer payments, track payment
history and contact customers with overdue balances.
Main Objectives:
Get paid – increase cash in bank
Retain customer
Reduce risk of incurring bad debt
Decreasing your A/R days by 10 days will increase your cash flow by
33% of one month’s average revenue

3. Before we get into the Dunning Process…
Avoid the Dunning Process by getting paid on time.
How is this done?
1. Perform an Order Review when the customer order is received.
2. Generate an Order Acknowledgment to your customer.
3. Generate a Packing Slip or Delivery Notice at shipment.
4. Make sure that your company has a consistent billing process.

4. Order Review Process
This is your chance to get it right from the start.
The order review process ensures that your Sales Order, Packing Slip
and AR Invoice match the customer’s purchase order.
These items should match:
1. Customer’s PO#
Activate an alert in your system to identify “orders without customer PO#”
2. Bill-to address
3. Items ordered, quantity, and price
4. Payment Terms
5. Look at the details

5. Order Acknowledgement & Delivery Notice
Order Acknowledgement
1) Let the customer know that you received their order
2) Communicate planned shipment date
3) Point out any discrepancies in price or payment terms
Delivery Notice
1) Generate packing slip to be sent with shipment
2) Reference customer’s order num on the packing slip
3) Follow the customer’s shipping instructions

6. AR Invoice Process
Institute a consistent billing process to be used for all customers.
Companies that invoice in an efficient manner have better cash flow
Some simple steps for an efficient process:
1. Generate AR invoices as soon as possible after shipment
2. Make sure invoices are clear and concise
They should match your customer's PO after the review process
3. Make sure the Due Date of the invoice is prominently displayed
4. Make sure that your Remittance address in on the invoice
5. Follow the customers invoice instructions
6. Follow-up on large invoices to make the customer has received
A simple customer service phone call can be effective
Use an Activity to remind of the follow-up

7. Example of good invoice:

8. Example of problem invoice:

9. The Dunning Process
The best way to contact unresponsive customers is thru a Dunning Letter.
SAP Business One Dunning Wizard provides:
• Different Dunning Templates that are definable by the user
• Ability to define different Dunning levels for each template
• Ability to include interest or letter fees
• Ability to show only past due invoices or all
• Ability to automate the process

10. Dunning Letter
Use these tips in generating a Dunning Letter to get results.
1. Make sure that all payments have been processed
2. Send your Dunning Statements at the same time each month.
3. Keep the letter to one page if possible
4. Address the letter to the person responsible for payment
5. Provide accurate and concise information on past due invoices
Show AR Invoice#, Cust. PO#, amount due and due date of each invoice
6. Request full payment by a specific date
7. Tell them where to send the payment
Reference bank wiring information and address for courier payments
8. Convey a sense of urgency – be firm and unapologetic
• Increase tone at each letter level

11. Sample Dunning Letter:

12. Dunning Letter – Progression
Progress your Dunning Letters at each level
1) Start with a general reminder of past due invoices
2) Tell the customer how many times you have contacted them
3) State that current and future orders could be put on hold
4) State that their amount could be turned over to a Collection Agency
5) State that legal action could be taken
Example:
We have sent you three previous notices in an attempt to settle your past due
balance. This is our final attempt to settle this amount before taking legal action.
Payment for all outstanding invoices and late fees is due within 10 days of this
notice.
If payment is not received within the terms outlined, we will have no choice but to
seek legal action.

13. Dunning Terms - Setup
Go To: Administration > Setup > Business Partners > Dunning Terms
Define the Dunning Letter Templates and Levels
Understand the timing and effective dates
Timing:
Customers must proceed thru the Dunning Levels sequentially
when implementing all customers start at Level 1
After the first letter customer progress thru each Dunning level

14. Dunning Terms - Setup
Effective days are cumulative
Effective
Letter Template After(Days) Becomes Effective Approx. Effective Date Calculation at Each Level
Dunning Letter 01 1 1 day after the invoice due date 1 day (level 01) = 1 day past due
Dunning Letter 02 30 30 days after Level 01 generated 1 day (level 01) + 30 days (level 02) = 31 days past due
Dunning Letter 03 30 30 days after Level 02 generated 1 day (level 01) + 30 days (level 02) + 30 days (level 03) = 61 days past due

15. Dunning Summary
1. Perform an Order Review when the customer order is received
2. Send an Order Acknowledgement
3. Send a Packing Slip with the shipment
4. Have a consistent invoicing process
5. Invoice promptly and follow customer’s instructions
6. Follow-up on the invoice to make sure it was received
7. Apply customer payments promptly
8. Send Dunning Letters on consistent basis
9. Do what you say – if you threaten legal action – take it

16. Accounts Receivable metric
Where are you now?
Where do you stand compared to your industry?
Days Sales Outstanding (DSO) – Average number of days that it takes a
company to collect on its invoices.
Should be only 10 – 15 days longer than your standard terms of sales
How to calculate:
Days Sales Outstanding (DSO) =
Accounts Receivable / Total Revenue for Period X # of Days in the Period

17. Summary
Thank you for taking time to participate in the SAP Business One User
Group meeting.
Please take a few minutes to give us feedback of the meeting and any
suggestions for going forward.
We are always looking for new clients to work with. And we'd like to find
more like you - companies that are engaged, smart, and focused on their
future.
Can you help us out?

18. Tour Wrap Up
Questions & Answers
Schedule for next Stops:
Aug 24th - Key Performance Indicators – KPI & 8.8 Cockpit
Sep 14th - Budgets
Oct 12th - SAP 8.8 cool features

19. Long Business Systems, Inc. (LBSi)
Cleveland – Columbus – Cincinnati – Pittsburgh
Questions:
Vicki Smith
Senior Consultant
Email: vicki@lbsi.com
Phone: 440-846-8500 Ext. 22
www.lbsi.com

20. Long Business Systems, Inc. (LBSi)
Cleveland – Columbus – Cincinnati – Pittsburgh
Questions:
Vicki Smith
Senior Consultant
Email: vicki@lbsi.com
Phone: 440-846-8500 Ext. 22
www.lbsi.com