Collections and bank reconciliation

Clear terms from the invoice onward

Collection starts before the customer owes anything. An invoice that says “payment in 30 days” without a date, payment instructions or a reference leaves room for doubt. State the due date, the accepted payment methods, the transfer details and which reference the customer must use, which should be the invoice number.

In the contract or sales terms it pays to set in writing the payment terms, any late-payment charge and the consequence of a returned check. A surcharge nobody knew about in advance is hard to collect without conflict. With 4mycontracts you can have the customer sign those terms and keep the accepted version.

An example: an air-conditioning maintenance company bills monthly service to offices. Each invoice states a 15-day due date, the account number and the phrase “use the invoice number as the reference.” Deposits arrive identified and nearly everything is matched in minutes.

For recurring services, add a sentence to the contract about how disputes over an invoice are raised: within how many days, in writing and to whom. A dispute window protects both sides, since it stops an old invoice from being challenged long after the work was accepted.

Payment methods common on the Island

Customers pay by ATH Móvil, by transfer or ACH, by card, by check and still in cash. Each method leaves a different trace on the bank statement: ATH Móvil and transfers usually carry a message or description; checks arrive with a number; cash demands a receipt of its own. Write down which methods you accept and what information must accompany each.

ATH Móvil payments to small merchants are sometimes batched or credited a day later. Reconcile against the bank statement and not against the phone notification, which shows the alert, not the credit to your account.

4invoices does not connect to banks or to ATH Móvil and does not record payments automatically. Payments received are recorded and matched by you or your administrative team against the bank statement.

Follow-up by SMS and email

The most effective reminder is short, courteous and specific: it says which invoice, how much, when it fell due and how to pay. With 4notify you write the text and send it by SMS or email from your account, to one customer or several. There are no reminders scheduled by due date; you decide when to send and to whom.

A reasonable cadence is a friendly notice a few days before the due date, another the day after if no payment arrives, and a personal call or message a week later. If the customer still does not pay, the next step is a formal communication with a copy of the invoice and the contract, and a conversation with your lawyer.

Before sending text messages to customers, confirm with your lawyer what consent you need and how to record it, because regulation of commercial messaging is strict. Keep a record of each message sent: date, recipient and text.

Matching payments to invoices

Reconciling collections means assigning each deposit to the invoice it pays. You work with the bank statement open next to the list of unpaid invoices: for each credit you look for the reference, the amount and the customer. Payments that match exactly close in seconds; doubtful ones go on a list of items to clarify.

Three cases are hard: a partial payment, one deposit paying several invoices and a payment with an unagreed discount. For the first, record the partial payment and leave the balance open. For the second, note which invoices it covers and confirm with the customer. For the third, decide whether to accept the discount and issue a credit note to document it.

Doing this review weekly, not monthly, reduces what needs clarifying to a few lines and lets the customer remember what the payment was for.

Keep one list of unmatched deposits and review it every Friday. A deposit that stays unmatched for more than two weeks should trigger a short message to the likely payer. Most mystery deposits come from customers who paid with a reference you do not recognize, and a single question resolves them.

Measuring collections with three numbers

To know whether collections work you do not need a sophisticated report, only three numbers a month: total invoiced, total collected and the balance more than 30 days old. If the balance over 30 days grows month after month, the problem is not your customers’ memory but your follow-up process or your terms of sale.

An example: a print shop bills $40,000 in April and collects $31,000 within the month. That leaves $9,000 outstanding, of which $6,500 belongs to two large customers who pay at 45 days by contract. The remaining $2,500 is true lateness from five small customers. With that split, reminders go to the five, and the two large ones get a courteous notice on the due date.

Jot those three numbers on a monthly sheet and compare them with last year’s. Your CPA can use them to review the doubtful-accounts reserve and to anticipate working-capital needs.

Overdue accounts and what to do about them

Invoices more than 60 or 90 days late need special handling. First, confirm that the customer received the invoice and that there is no dispute about the service. Second, offer a payment plan in writing if there are difficulties. Third, decide with your CPA whether part should be reserved as a doubtful account.

If the customer does not respond, the path continues with your lawyer: a demand letter and, if warranted, a court claim. What determines the result is documentation: the contract, the invoice, proof of delivery and the messages sent. Having it organized from the start saves time and cost.

Write down, in your terms of sale, the point at which you pause new work for a customer with an overdue balance. Applying that rule consistently is easier than negotiating it case by case, and it keeps small delays from becoming large unpaid balances.

No. 4notify sends the SMS and emails that you write and trigger from your account; it is not tied to 4invoices due dates and does not generate notices on its own. If you want a rhythm of reminders, you set the dates and the texts and send them manually, with a calendar of each customer’s due dates.

4invoices issues and archives PDF invoices and does not connect to ATH Móvil or to banks. You can keep track of collections in your bookkeeping or in a follow-up sheet and mark there what was paid, after verifying the deposit on your account’s bank statement, and keep the proof of each payment with the invoice.

The invoice number, written exactly as it appears on the document. It is the easiest reference to search and verify. If a customer pays several invoices together, ask them to list the numbers in the description or in an email. The clearer the reference, the less time you spend reconciling, and the sooner you can mark each invoice as paid.

When reminders and calls produce no response, or when the customer denies the debt. Beforehand, gather the contract, invoices, proof of delivery and the messages sent. Your lawyer will assess whether a demand letter or a claim is worthwhile and what it costs against the amount owed, since small sums are not always worth litigating.

Reminders you write yourself

SMS and email from your account; payment matching is done with your bank.