In this guide 6 sections
Repeat lateness has four usual causes: a payment habit, a disputed invoice, a missing proof of delivery or a credit limit nobody set. Open each overdue account in the receivables ledger, tag every open invoice with one cause, then change the follow up rule or credit hold that fits.
Open the account ledger, not just the ageing report
The ageing report names the late customers. It never says why. Take the five accounts that sit in the 60 and 90 day columns every month and open each ledger on its own, with twelve months of invoices and receipts.
Set each due date against the receipt date. Eleven days late, every single time, is a habit. A customer who clears most bills on schedule but leaves two untouched for months has something stuck, and that is a different problem entirely.
Write one line per account. That line decides where you look next. Keep it blunt.
- Invoice date, due date and receipt date on every row
- Part payments and unallocated receipts sitting on the account
- Credit notes raised after the original invoice
- Credit limit and payment terms stored on the customer master
Habit looks different from dispute
A habitual payer settles the whole statement in one transfer, close to the same day each cycle, because their own payment run is the cause. Ask when their accounts team releases cheques, then set your due date just ahead of that run so your invoice makes the batch.
A dispute leaves a different trace: everything else clears while one or two lines sit open for months, and those lines are where you look. Check them for a short quantity, a rate that differs from your quotation, or a purchase order number the customer never quoted back.
A dispute looks like lateness. They pass for lateness, so the collector keeps phoning about a bill the customer will not pay until a credit note arrives.
Check the delivery proof before the next reminder
Many parked invoices have no matching goods received note on the customer side because the signed delivery note was never scanned, or still rides in a driver’s cab. The payables clerk cannot verify it. So the bill waits.
Pull each late invoice’s dispatch record. Missing signature? Get it, then attach it to the invoice. A reminder carrying the signed copy gets answered, while a bare reminder goes straight into the customer’s pending folder and stays there until someone complains.
Service work has its own proof: a signed timesheet, a completion certificate, or a work order approved by the customer’s site engineer before the job started.
- Signed proof of delivery filed against the invoice
- Customer purchase order number printed on the bill
- Quantity delivered against quantity billed
- Rate billed against rate quoted
Find the credit limit nobody set
Open the customer master for each repeat offender. Is a limit recorded? Are the terms the agreed ones? Or thirty days, typed years ago? Often both fields are blank or stale.
With no limit on file, the sales desk keeps accepting orders, the warehouse keeps loading trucks, and nobody sees the old invoices stacking up unpaid behind them. The balance grows. Nothing stops the next dispatch. Lateness costs the customer nothing, so it becomes normal.
Set the limit from history. Then pick the action at the limit. Choose among a warning to the salesperson, an approval from you, a hold on the sales order, or a line in the weekly credit meeting.
Change one rule per cause and read the next cycle
Match each account to a single change. Habit gets a moved due date. A dispute gets an owner. A missing proof holds the bill. No limit? Set one and add a hold.
Resist the urge to change everything. Change reminders, terms and limits together and you will never learn which of the three actually moved the receipts, so touch one lever per account.
Reopen those five ledgers next cycle. Keep what worked, drop what did not. Repeat with the next five, then the five after that, until the 60 and 90 day columns stop repeating the same names every month.
Overdue customer diagnosis sheet
One page, one row per overdue customer. Columns cover the oldest open invoice date, days overdue, average days late over twelve months and the count of disputed lines per account. Two tick columns record whether proof of delivery and a credit limit exist on file, followed by a cause code: habit, dispute, proof or limit. Last come owner and rule changed.
Open a blank worksheet to printQuestions owners ask
How do I tell a slow payer from a customer in trouble?
Watch the trend. A slow payer is predictable. A customer in trouble pays later every month, sends smaller part payments, asks for statements to be reissued and starts quoting reasons you have not heard before. Lower the limit when the gap keeps widening.
Should disputed invoices stay on the ageing report?
Yes, with a reason and owner tag. Untagged, they draw reminders, not credit notes.
What credit limit suits an old customer?
Start from the highest balance they carried and still paid down during the past year, then add room for exactly one normal order. Review it every quarter against real receipts.
Can software hold orders for a customer over the limit?
Credit control features can warn, ask for approval or block a sales order when the open balance plus the new order passes the limit. You choose the action per customer.