SAP Financial Accounting (SAP FI) Practice Exam

Which aspect of dunning procedures helps manage overdue accounts?

1. Minimum balances

2. Discount offers

3. Levels of dunning

4. Export requirements

The correct answer is: Levels of dunning

The aspect of dunning procedures that assists in managing overdue accounts is the levels of dunning. Dunning procedures are systematic ways of reminding customers about their outstanding invoices, and the levels of dunning represent a structured approach to escalating reminders based on the duration of the overdue payment. Each level in the dunning process typically corresponds to a different stage of the collection effort, progressing from gentle reminders to more severe communications. As a customer’s account remains overdue for a longer period, they may receive increasingly urgent dunning letters, which can include various messages such as reminders, warnings, or even threats of legal action. This graduated approach can motivate customers to settle their debts promptly to avoid harsher consequences. Other options, while potentially relevant to financial management, do not specifically target the structured reminder process that dunning levels provide. For example, minimum balances might relate to account maintenance requirements, discount offers could encourage early payments but do not specifically address overdue accounts, and export requirements usually pertain to international trade and logistics rather than account receivable processes. Thus, levels of dunning is pivotal in systematically managing overdue accounts, ensuring that reminders are tailored to how overdue an account is.