Revenue Service refers to the organisational process of monitoring outstanding receivables and reminding customers of due payments. It is a central component of Financial accounting and supports businesses in systematically tracking incoming payments.
Basics
If invoices remain unpaid after the agreed payment deadline, they are considered outstanding receivables. The dunning system is used to systematically monitor these receivables and send payment reminders.
Through clear dunning processes, companies can keep track of their receivables and identify payment backlogs early on.
Classification in accounting
The dunning system is closely linked to the management of Outstanding items (OPOS) connected. As long as an invoice has not been paid, it remains in the system as an outstanding item.
The dunning process ensures that these outstanding invoices are regularly reviewed and, if necessary, reminders are sent.
Classification within the financial accounting system
Dunning typically falls within accounts receivable and complements processes involving invoicing and payment receipt.
Typical steps in the dunning process
- Open receivable review
- Sending a payment reminder
- Sending further reminders in case of non-payment
- Monitoring of incoming payments
- Offsetting a claim for payment
Many accounting systems support these processes through automated dunning runs.
Typical procedure
- Invoice will be created and booked
- Invoice remains open after due date
- Sending a payment reminder or dunning notice
- Payment received will be booked
- Open item to be balanced
Practical relevance
A structured dunning system helps companies secure their liquidity and reliably monitor receivables. At the same time, it creates transparency regarding the current status of receivables.
The link between OPOS management, payment transactions and the dunning process enables systematic control of open accounts receivable.
Typical sources of error
- Incomplete monitoring of open claims
- Missing or late reminders
- Unclear allocation of incoming payments
FAQ
The purpose of reminders and dunning is to prompt customers to pay outstanding invoices.
The dunning system ensures that outstanding claims are monitored and customers are reminded of non-payment.
Where is the reminder system organisationally located?
The dunning process is typically part of accounts receivable within financial accounting.
Conclusion
The dunning process is an important part of financial accounting. It supports companies in the structured monitoring of outstanding receivables and the systematic management of incoming payments.
Brasser Accounting Solutions GmbH is a specialised accounting service provider and part of a corporate group with Quint GmbH (tax consultancy/auditing) and Service Place Årjäng AB (Swedish tax office). BAS exclusively performs services according to § 6 No. 3 and 4 StBerG and does not provide tax or legal advice.
