Version 1.0
Prepared by: @Lorraine Sebata
Approved by: @Marcia Wilkinson
Reviewed date: 2025-09-13
Next review date: 2026-09-11
The purpose of reviewing and updating customer groupings is to streamline details and ensure efficient reviewing and accuracy of the details in the Receivables ledger. Regular updates help maintain proper classification, improve collections, and enhance reporting accuracy. This SOP aims to establish a systematic approach for managing customer groups within the accounting software to support effective credit management and financial reporting.
This SOP applies to the Accountant, or another accounting team member in their absence, who is responsible for reviewing the Accounts Receivables Report-Grouped for accuracy and to ensure customers are placed in appropriate groupings regularly. This encompasses all customer accounts with outstanding balances or those requiring classification for reporting and collection purposes.
Accounts Receivables Report Review: The Accounts Receivables Report-Grouped should be reviewed on a weekly basis to ensure all customer accounts are accurately classified and placed in the appropriate group.
Discrepancy Resolution: Any discrepancies or issues identified during the review process should be promptly addressed and resolved to maintain the integrity of the receivables data.
Documentation of Changes: The review process should be documented, and any changes made to customer groupings should be tracked and communicated to the relevant stakeholders.
Accountant / Accounting Team Member: Primarily responsible for accessing, reviewing, updating, and documenting customer groupings in the accounting software. Also responsible for identifying and resolving grouping discrepancies.
Management Team: May be consulted for complex grouping decisions or policy interpretations.
Sales/Customer Support Team: May be informed of significant changes in customer group classifications.
5.1.1 Log into the Accounting Software (Xero).
5.1.2 Navigate to the 'Accounting' tab.
5.1.3 Select 'Aged Receivables Summary-Grouped' to access the report.
5.1.4 Review the report to identify customers with outstanding balances that require collection and pursuit.
5.1.5 Identify any customers that have not been grouped and note them for grouping where needed.
5.2.1 In the search menu within Xero, enter the customer's name.
5.2.2 Select the appropriate customer name that appears in the drop-down menu.
5.2.3 Select the menu option (often represented by an ellipsis or gear icon) and choose 'Manage Groups'.
5.2.4 Select all applicable boxes (group categories) that apply to the customer based on their business relationship and characteristics.
5.2.5 Click 'Apply' to save the grouping changes.
5.3.1 Systematically review the 'Aged Receivables Summary-Grouped' report to locate customers that have not been grouped and assign them to the correct category as per section 5.2.
5.3.2 Verify that previously grouped customers are still correctly classified based on current business relationships, transaction history, and any updated internal criteria.
5.3.3 If discrepancies are found (e.g., a customer is in the wrong group, or a group is no longer relevant), proceed to update as per section 5.4.
5.4.1 Use the search menu to locate a specific customer by entering their name.
5.4.2 Select the appropriate name that appears in the drop-down menu.
5.4.3 Click on the menu option and choose 'Manage Groups.'
5.4.4 Adjust the selected categories to reflect the correct grouping for the customer.
5.4.5 Select all applicable categories for the customer and click 'Apply.'
5.5.1 After making any grouping changes, double-check the updated groupings to ensure accuracy by re-running the 'Aged Receivables Summary-Grouped' report.
5.5.2 Save all changes within Xero.
5.5.3 Generate an updated version of the Receivables Report for record-keeping.
5.5.4 Document any modifications made to customer groupings in an internal log or tracking system, including the date of change, the customer affected, the old group, and the new group, for reference and audit trails.
5.6.1 Notify the finance team of any critical updates to customer groupings that may impact collections strategies, financial reporting, or credit risk assessment.
5.6.2 If necessary, inform the sales or customer support team about significant adjustments in customer group classifications, especially if it impacts their client interactions or service levels.
5.7.1 Maintain a record of past updates and ensure all groupings are reviewed periodically, at least on a weekly basis as per policy.
5.7.2 Implement automated reminders or workflows within Xero (if available) to prompt weekly reviews and ensure adherence to the review schedule.
5.7.3 Ensure compliance with company policies regarding credit risk and account management as customer groupings directly influence these areas.
Aged Receivables Summary-Grouped Report (from Xero)
Internal Customer Grouping Log/Tracking System
Communication Records (emails, meeting minutes regarding grouping changes)
All Accounting Team members responsible for reviewing and updating customer groupings will receive mandatory training on this SOP and related policies annually or upon significant revisions.
This SOP will be reviewed annually by the Accounting and Finance Departments to ensure its continued effectiveness, compliance with financial policies, and alignment with business objectives.