Debt management encompasses organisational measures for monitoring, controlling and realising receivables – particularly from deliveries and services. The aim is to keep open receivables transparent, to track payment flows, and to systematically allocate incoming payments.
Basics
Claims typically arise when a company provides a service and issues an invoice. The amount remains as an outstanding claim until fully paid.
Debt management is therefore closely linked to accounts receivable and the management of Outstanding items (OPOS).
Classification in accounting
Debt management is a component of external accounting because it supports the ordering and traceability of receivables and incoming payments. It is closely related to Financial accounting and the Debtors ledger.
The focus is on structured processes – from capturing invoices and monitoring outstanding amounts to allocating payments.
Classification within the financial accounting system
- Financial accounting
- Debtors ledger
- Outstanding Items (OPOS)
- Revenue Service
- Bank transactions
- Payments
Debt management combines open items and balance displays, dunning processes, and incoming payments. This makes it a central building block for managing the receivables portfolio.
Typical debt management processes
- Tracking and monitoring outgoing invoices
- Monitoring of due dates and payment terms
- Maintenance of OPOS lists and reconciliation with incoming payments
- Running dunning runs in Revenue Service
- Allocation of incoming payments Bank transactions
Typical procedure
- Invoice is created and recorded in accounts receivable.
- An open item is created and managed in the open item overview.
- Payment deadline/due date is being monitored
- In case of non-payment: reminder process
- Payment received is posted and assigned to the open item
Practical relevance
In practice, the accurate allocation of payments to invoices is crucial. This is the only way to keep open item lists up-to-date and reliably assess outstanding balances.
Structured receivables management also supports liquidity management because outstanding receivables and expected payment receipts become more transparent.
Typical sources of error
- Payments are not assigned or are assigned incorrectly (OPOS remains open)
- Due dates are not regularly monitored
- Payment occurs late or inconsistently
- Inconsistent data source (e.g. missing invoice references)
FAQ
Is debt management the same as dunning?
No. Dunning is a sub-section. Claims management encompasses the entire process from the recording of outstanding claims to the allocation of incoming payments.
Which lists are typically used?
OPOS lists are often the basis for monitoring open receivables and their status.
Conclusion
Debt management involves the monitoring and control of outstanding receivables – from open item clarifications to dunning processes, payment receipts and settlement. It is a central component of accounts receivable accounting within financial accounting.
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.
