The Credit Management System provides Credit Managers with all relevant information needed to make on-line decisions regarding order acceptance, order release, and collections. Alliance provides a comprehensive view into a customer's credit history for fast review, plus unlimited credit history notes for documenting customer promises, approval and collection activity.
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Aging the Open Receivables
Alliance ages the open receivables for each customer in as many as eight aging buckets.
An Alliance Data Area controls the number of days in each aging bucket, allowing you to define unequal bucket sizes, and to change the aging bucket sizes whenever needed.
Aging programs re-age the entire customer file on demand.
The A/R aging buckets are similar those you specify in Accounts Payable.
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Credit Checking Rules
Another credit parameter determines the credit checking rules for each customer. Alliance has credit rules that range from unquestioning acceptance of all customer orders to automatic holding of all customer orders. In between, Alliance can perform credit checks based on a total credit limit, a per order credit limit, and allows a grace period on past due invoices.
There are four types of credit checking:
- Total Credit- Total open A/R plus on-order dollar amounts plus booked-but-not -shipped orders plus the current order amount.
- Order Limit- No single order can exceed a fixed dollar amount.
- Shipment Limit- No single shipment can exceed a fixed dollar amount.
- Past Due Days- The number of days past due which will result in an order hold if the customer owes any amount. Shipment date or invoice date may be used to trigger this hold.
In addition to having the system place an order on hold based upon these credit rules, any open order can be manually placed on hold and assigned a reason code. This holds orders that might need additional review for suitability, or some other condition other than credit worthiness.
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Credit History
Alliance provides two historical views of account activity by period.
Alliance summarizes billing information by period according to high credit, past due and days of sales outstanding, with a snapshot of the aging bucket for each period.
Alliance shows the payment total per period, the total number of payments and weighted days to pay, with a snapshot of the aging buckets paid that month.
In addition, Alliance maintains the year-to-date bookings, sales, payments and credit amounts on-line with last activity date for each of these transactions.
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Credit Sorting Codes
Three codes in the Customer Master File help you sort customers based on their credit profile. The values for each code are defined in the Alliance System Reference tables.
The first code sorts customers according to their credit region, which can represent a geographic territory or a specific credit analyst. Several Alliance Credit Management reports are sorted by credit region.
The other two codes allow you to query into credit files by customer credit ranking and customer credit risk. These user-defined values allow evaluations to be based upon past credit performance.
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Customer Master Information
The Customer Master File contains the name, address, and other information required to process a customer sales order. In addition, it contains a reference to a consolidated customer account that maintains credit-processing parameters. The Consolidated Customer Master record allows credit limits, credit checking rules and other credit parameters to be set for each customer. This account also accumulates the AR amounts for one or more billing and shipping customers. In addition, the Consolidated Customer Master File provides a separate contact name and telephone number for collections, which is typically different from the sales order processing contacts in the customer file.
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Customer Statements and Dunning Letters
Each Consolidated Customer Master has parameters to indicate whether the customer should receive an AR statement, and whether to issue dunning letters.
Statements can be produced anytime, for any aging date and for any range of customers. They list each open invoice for customer reference.
Dunning letter text can be written for each of the eight A/R aging buckets, with a different beginning and ending text in each bucket. A list of open invoices appears between these two sections of text.
A customer will receive the dunning letter identified with the aging bucket of the customer's oldest undisputed invoice.
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D&B Information
Alliance provides fields in the Consolidated Customer Master File to store the D&B number and D&B rating for each customer. Use these fields to supplement credit reports and other customer listings.
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Easy Cash Application
Alliance supports multiple methods of entering cash receipts: by specific open item, and in mass application across a range of open items.
Cash application is easy within Alliance. All cash payments, charge-backs, write -offs, and other account adjustments are organized into data entry batches to support internal controls.
Alliance displays the up-to-the-moment open AR listing for the customer, including amounts still owed and eligible discounts. Discounts are calculated by the system, and are taken automatically when an eligible invoice is paid in full.
You can enter the amount paid by invoice or simply note that an invoice is being paid in full. A range of invoices to be paid can also be noted.
Alliance tracks the disposition of each check and helps balance the amount applied against the check total.
To complete the application of a check, you can put any portion of an open check on account, write off any portion against any series of GL numbers, or credit and /or charge any amount to the customer against a series of user-defined transaction codes.
Each posted check is immediately available for on-line inquiry in the payment history inquiry. With these tools, Alliance makes the cash application process go quickly and smoothly.
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Finance Charges
The Consolidated Customer Master specifies the customers who should have finance charges added to their accounts for overdue invoices. Alliance features a system -wide and customer specific grace period for overdue invoices before finance charges are applied.
You can specify a minimum and maximum system-wide finance charge amount, or specific charge for each customer. Finance charges are calculated by an Alliance program run at the user's request. The charges are then added automatically to the customer's account.
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Fully Integrated AR, Credit, and GL Information
Information in the Credit Management System is integrated on-line with AR so that each customer payment is instantly available on the payment history screen. Total credit balances and aging are updated based on the end-of-day posting of cash entry work; which also updates the General Ledger.
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On-line Accounts Receivable Inquiry
Alliance provides on-line inquiry into the open AR detail for an account. The system shows the original cash application batch and the related order number. This inquiry can be sorted by invoice, payment date, or check number for a customer account.
Any invoice can be marked as disputed, which prevents Alliance from generating a dunning letter based on the age of that invoice. In addition, a short note can be made about the invoice and extensive customer credit notes with follow-up dates can be added while reviewing the list of open receivables.
Information from new invoices reaches this screen from the sales order billing and invoice program. Payments are updated by the Daily Cash Deposits Report and invoices are re-aged by the end-of-day process.
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On-line Credit Checking
Alliance checks a customer's credit as each order is entered or changed.
In Release 4.0, Alliance displays a preliminary credit warning message on a total order value screen as the order is being entered. A final credit check is made when the order entry is completed.
If an order fails the credit check, the order status changes to "On Hold" on the order entry screen. You can use the Action Bar to transfer to the credit hold inquiry screen to review the failure reason code and the customer's credit history.
After reviewing the credit worthiness of the account and the credit activity by period, several actions can be taken on this order:
- Release it with no further checking.
- Resubmit it through the credit check if the account limits or payments have been changed.
- Leave it on hold, perhaps with a new reason code indicating a further action required.
During the credit review, a credit analyst can also update the customer credit notes file with the reasons behind any actions or enter a sales order POP note to alert the Customer Service Department when this customer places another order.
Releasing an order from credit hold does not affect other orders on credit hold. Receiving and posting a customer payment may permit new orders to pass credit checking, but does not automatically release held orders. Those orders need to be reviewed and released individually.
To assist in this process, Alliance supplies reports and inquiries of held orders by customer and by date.
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On-line Payment History
Collections work requires the ability to track down payments made to a customer account. Alliance provides an on-line payment history inquiry that can search for any check number, payment date, or invoice for a customer's account.
This history remains on-line as long as needed, and points back to the cash application batch, the invoice paid, and other useful information. You can reprint the invoice or look up order shipment and returns information by invoice number.
Information on this screen is updated as each check is posted within the cash application entry program.
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Past Due Accounts
Alliance can print a report of past due customer accounts over a certain dollar amount. Specify the minimum dollar amount and the minimum aging bucket to search.
After reviewing the past due situation with a customer, you can reprint their open AR statement as of any aging date and update their customer credit notes file.
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Payment Terms
Alliance allows an unlimited number of payment terms to be defined, based on four payment models:
- Number of days until the invoice is discountable and due
- A specific future discount and due date
- A number of split payments and due dates based on a specific end-of-month (prox terms)
The payment terms are similar to the terms developed in AP and can be overridden for any specific customer order.
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