The Problem: Invoices That Sat Unpaid for 90 Days
A small IT services company had a critical cash flow problem: their average invoice payment time was 72 days, while they had to pay their subcontractors in 30 days. The accounts receivable clerk manually sent payment reminders via email, but often forgot or sent them to the wrong contact. The company was forced to take a high-interest line of credit to bridge the gap, costing $15,000 per year in interest.
How ERPNext Automated the Collections Process
They activated ERPNext’s Accounts Receivable and Automated Reminder features with these specific steps:
- Automated dunning schedule: ERPNext is configured to send automatic email reminders at 7, 14, and 30 days past due. Each reminder includes a direct link to the invoice and a payment portal.
- Customer credit limits: For each client, they set a credit limit in ERPNext. If a customer’s outstanding balance exceeds the limit, the system blocks any new sales orders until the overdue invoice is paid.
- Real-time aging report: The finance team now reviews a live “Aging Summary” dashboard every Monday. It highlights accounts over 60 days, and one-click sends a final notice to the top 5 offenders.
The Measurable Improvement
After three months, the average payment time dropped from 72 days to 38 days. The number of invoices over 60 days fell by 70%. The company eliminated the need for the line of credit, saving $15,000 annually in interest. The AR clerk now focuses on relationship-building with key clients instead of chasing payments.