Collection cases on customer vs invoice level
Zero Friction supports a collection process to follow up debtors with past due invoices. This is a process that can be activated in the configuration settings of your organisation. The process consists of several steps that can be defined by the user and that will take place for defined intervals. Examples of such steps can be: sending out a first reminder to the customer, a second reminder, a dunning for payment, a reminder call and so on.
There are two ways on how the collection process can be configured:
On customer level
On invoice level
Customer level
On customer level means that the collection process will group all overdue invoices from that customer in one collection cycle. When an invoice is overdue it will be added to a collection cycle and step 1 of this cycle will be executed by the system. When a customer is accumulating overdue invoices, they will be grouped in the same collection cycle that might be, based on the first overdue invoice, already in step 3. This way, the collection process is not restarted from step 1 for consecutive overdue invoices. They are added to the total sum of the outstanding collection cycle and the cycle just continues on the step it is.
Invoice level
On invoice level means that each time an invoice is overdue, a new collection cycle is created and starts from step 1. This way, each overdue invoice from that customer follows all the steps of the collection proces and as such multiple collection cycles will be started for that customer.
Step types
There are two types of steps that can be defined in Zero Friction:
Manual intervention
Communication
Manual intervention means that a manual intervention is needed by the user. This could be doing a reminder call to inform the customer of the unpaid bill. Another example could be that a last step in the collection proces is defined as handing out all overdue invoices to an external party such as a collection agency. This external party will then continue with the following up on these.
Communication means that a communication message is automatically sent to the debtor by the system. For example: a first reminder e-mail, a second reminder letter by post, a dunning for payment...
There are standard templates for collection communication available in Zero friciton and these are fully customizable.
Charges
For each step in the collection process, the user can define if a cost is to be charged to the customer. The types of charge are explained below:
Fixed: This means a fixed amount is to be paid for this step.
Percentage of open amount: This type means that a user defined percentage is used to calculate the charge.
Tiered percentage of open amount: This charge type is defined in tiers, defining a minimum and a maximum amount and a percentage that will be used if the overdue invoice falls in that tier.
Charge write-offs
You can configure what will happen with the extra collection charges when a customer has paid the invoices included in the collection cycle. This will also impact if the collection case will be automatically closed or not.
Upon paying these invoices, the extra collection charges which were added during the collection process can be refunded to the customer or not be refunded at all.
No write-off: When the customer has paid the invoices that were in the collection cycle, the extra charges are not refunded. The customer has to pay all the extra charges that came with the collection process. Only if he has paid everything, the collection cycle will close.
Open amount: When the customer has paid the overdue invoices in the collection cycle, the extra charges that are not yet paid are refunded. If some charges have already been paid, these will not be refunded. Only the unpaid charges. So any remaining charges are credited and the collection cycle is closed.
Charge amount: When the customer has paid the invoices that were in the collection cycle, the extra charges are fully credited and, if already paid, will be refunded. The cycle will close automatically upon receiving the due amount.
When a customer has not paid the overdue invoices, the collection cycle will remain open untill the user decides to manually close it. Also the three options above will be presented to the user on what to do with the collection charges for that customer.
Statuses
A collection case can have one of the following statuses:
Active: The collection case is still active. The overdue invoices haven't been fully paid yet by the customer.
Manually closed: The collection case has been manually closed by the user. This means that the overdue invoices weren't fully paid and the user has decided to close this collection cycle for whatever reason.
Automatically closed: The collection case has been automatically closed by the system. This is the case when the overdue invoices have been paid by the customer (including extra charges, depending on the configuration related to the charge write-off).
Step statuses
Each step in the collection cycle can have several statuses:
Pending: The step is in a state of pending. It is waiting until all parameters (e.g. day) are reached to execute.
Waiting for manual send: The user has to manually send the reminder documents by post as no e-mail is available for that customer.
Closed: The user can decide to close a step manually. This means that the step was marked as executed and the collection cycle continues on the next step.
In progress: This means that the step is still busy with executing. This is a temporary state and after completion it will switch to another state.
Skipped: The user can decide to skip one step in the collection cycle. He executes the skip action and the collection process will directly go to the next step.
Generating documents: This means the system is generating documents in the background. This is a temporary state and after generating the documents, it will change to another status.
Failed: The step has not been executed properly and has failed. The user has to see why and correct it manually. Perhaps an e-mail address was missing to be able to send the reminder e-mail to the customer.
Printing: The step is busy printing a document (reminder letter or similar document).
Relevant configuration
Collection flows
Billing parameters