Handling overdrawn client accounts

A client’s fund account is overdrawn when it holds a negative balance, which usually happens when an invoice is recoursed to the client after the client has already been paid for it. This page describes what the platform does about it on its own, the three settings that tune the notices, and what you do yourself, because there is no automatic collection of an overdrawn amount.

What counts as overdrawn

Overdrawn handling applies to clients with the Invoice factoring sell product. Two slightly different balances are used:

Used for	Balance that is looked at
The overdrawn fee and the overdrawn interest	The total of all the client’s fund accounts in that currency, factoring and service together
The overdrawn settlement note and the alert on the dashboard	The balance of the client’s Invoice factoring sell fund account on its own, in the system currency, compared with a threshold

Because the interest is calculated on the combined balance, positive Invoice service funds automatically reduce a negative factoring balance. No transfer between the accounts is needed for that.

To list the accounts that are negative right now, use the Negative balances chip on Client fund accounts.

What happens automatically

What	When	Depends on
Financing overdrawn fee	Once, on the day the balance becomes negative	The client having a price for the article Financing overdrawn fee
Financing overdrawn interest	Every day the client is overdrawn, from the very first day	The client having a price for the article Financing overdrawn interest. The percentage is applied to the total overdrawn amount, and the base interest rate is added when the client’s base interest settings include the overdrawn interest
Overdrawn settlement note	While the balance is below the threshold, daily, weekly or monthly, and only when there are new transactions to report	The settings below
Alert on the dashboard	By the daily run, while the balance is below its threshold and the client has no unresolved alert of this kind	The settings below

The fee and the interest are charges to the client. You find them on the client’s Charges tab as Financing Overdrawn Fee and Financing Overdrawn Interest, and the prices on the client’s Billing tab under Price List. A client with no price for an article is simply not charged for it.

The interest starts at once. There are no grace days and no threshold for the interest. The thresholds below only control the settlement note and the alert.

The alert is a high priority item that reads “Client account is overdrawn with” the balance. It appears on the Dashboard under System events as Overdrawn client account, and no new one is created for the client while an earlier one has not been resolved.

A payout to the client is balanced against its overdrawn accounts as well, see Review payouts before you generate. That is done only for accounts in the same currency and service provider, and only while the client setting for automatic payout adjustment is on, which it is for new clients. Balances in different currencies are not netted against each other: accounts are kept per currency and payouts are made per currency.

The three settings

The two settlement note settings can be set for a single client and as a default for the whole system. A value on the client wins over the system value, and when neither is set the default below applies. The alert threshold is set per client.

Setting	What it does	If not set
OVERDRAWN_SETTLEMENT_NOTE_BALANCE_THRESHOLD	A settlement note is sent when the account balance is below this value	0, so any negative balance
OVERDRAWN_SETTLEMENT_NOTE_INTERVAL_THRESHOLD	How often the note is sent: DAILY, WEEKLY (Mondays) or MONTHLY (the 1st, or the first Monday when the 1st falls on a weekend)	DAILY
TODO_CLIENT_ACCOUNT_OVERDRAWN_THRESHOLD	The balance below which the daily alert on the dashboard is created	0, so any negative balance

A threshold is a balance, so a value of -5000 means “only when the account is more than 5000 overdrawn”.

1. Open the client and choose the Other settings tab.

2. Open the section Advanced client settings. The three settings are listed there with their code, a description and a value. Settings not yet set for the client are listed with an empty value.

3. Choose Edit on the row, enter the value and save.

The system defaults of the two settlement note settings are on Environment > System > Settings, in the same code, description and value list.

No settlement note without something to report

A settlement note is never sent empty. It is created only when the account has transactions that have not been reported yet, so a change on the account, such as a payment or a correction, causes a new note the next time the interval and the threshold allow one.

Following up

A client account cannot be put in collection. Collection always belongs to a debtor’s invoice, and there is no automatic process or maximum time for an overdrawn client account.

What operators typically do is follow up on the amount themselves:

1. Review the overdrawn account on the client’s Bookkeeping tab, and the settlement note the client has received.

2. If the amount is to be collected, create an invoice for it with the client itself as the debtor. That invoice can then go through the normal reminder and collection flow.

3. When the client pays, adjust the client account for the payment. The change on the account leads to a new overdrawn settlement note.

This is working practice rather than a built-in function. Any further automation, such as a limit on how long an account may stay overdrawn, is not available and would have to be requested.

See also

• Client fund accounts for the list of all client accounts and what Active and Inactive mean
• Distributed reports and files for the overdrawn settlement note