The numbers your board asks about
Receivables management and finance
DSO, recovery rate, aged debtor listings and provisions — the language finance uses for the things the collections department calls something else.
The process
The whole dictionaryApplies all the way through
Receivables management and finance is not a step in a case. It applies from the invoice to the bailiff’s court.
The concepts
16 conceptsThe concepts in this theme
Each entry is one page: the definition, the rate and the rule behind it.
- Account reconciliation (kontoafstemning)Account reconciliation is the check that the sales ledger and the bank account show the same thing — and that every difference can be explained.Ledger and bank accountcompares
- Aged debtors report (aldersfordelt saldoliste)The aged debtors report shows your outstanding receivables broken down by how long they have been overdue.Outstanding amounts per age bracketshows
- Aging bucketAn aging bucket is one of the intervals in the aged debtors report — the band an invoice falls into, depending on how long it has been overdue.0-30, 31-60, 61-90, over 90 daystypical split
- Bad debt ratio (tabsprocent)The bad debt ratio is the share of revenue that ends up as realised losses on the debtor ledger.Losses as a percentage of revenuemeasures
- Cash applicationCash application is the work of matching an incoming payment to the right invoice and closing it — automatically, when the reference is in order.Payment against invoicematches
- CEICEI (Collection Effectiveness Index) measures how much of what could actually be collected in a period you in fact brought in.Effectiveness, not speedmeasures
- Client account (klientkonto)A client account is the separate bank account where a debt collection business keeps debtors' payments apart from its own operations.Debtors' paymentsholds
- Debtor segmentation (debitorsegmentering)Debtor segmentation is dividing your debtors into groups to be treated differently — so the strategic customer does not get the same reminder as the one who is always late.Amount, risk and relationshipdivided by
- DSODSO (Days Sales Outstanding) is the average number of days from the moment you invoice until the money is in the bank.Days from invoice to paymentmeasures
- No cure no payNo cure no pay means that the collection agency is only paid if the claim is recovered — typically as a percentage of the amount collected.Only on recoverypayment
- Provision for bad debt (hensættelse til tab)A provision for bad debt is the accounting reserve for the loss you expect on your receivables — before it has been realised.An expected loss, not a realised oneis
- Receivables management (debitorstyring)Receivables management is the end-to-end control of outstanding invoices — from invoice to payment, reminder or debt collection.DSO and write-off ratemeasured on
- Recovery rate (inddrivelsesgrad)The recovery rate is the share of the claims handed over that is actually paid.Paid claims as a % of those handed overmeasures
- Reminder cadence (rykkerkadence)The reminder cadence is the fixed rhythm your reminders go out in — who is chased when, and what happens once the deadline has passed.10 days between each reminderminimum
- SLA in debt collectionAn SLA is the agreed service framework for the collection work — response times, case handling times and reporting.
- Write-off (afskrivning)A write-off is the accounting recognition that a claim is lost — but it does not extinguish the legal claim.An accounting entryis
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Other themes in the dictionary
The 6 steps of the process are above. Here are the other cross-cutting themes.