Debtor problems?

Hamish Mexted Managing Cash

If you’ve got debtor problems in your business you’re certainly not alone.  How big the problem is will often depend on the what you do and don’t do.  Do you actively chase your debtors or do you take a more passive role, simply accepting your customers terms?

Xero recently commented on what they see as best practice:

To help with some of that pain, here are some best practices:

1. Set your own payment terms including invoicing dates and due dates..

3. Require a signature on estimates and in every written communication with your customer…

5. Ask for a primary contact to chase for payment and also a secondary contact in the event that the primary contact is out or on vacation.

6. If you need to travel to meet your customer then have them book it and pay for it.

7. … make it dead simple to see what money is coming in, what money is going out, and track the “baddies” with overdue payments.

We’re big on creating strong policies and procedures around debtors.  Make a rule in your business to chase debtors as soon as they’re a day over due.  The quicker you’re onto it the less chance there is of the debt turning bad.  Stick to your procedure religiously and people will soon get the message.

There’s also a range of tools out there, like DebtorDaddy, which can help you manage the collection process.  Get in touch with iif Chartered Accountants & Business Advisors – we can catchup for coffee and run through getting your debtors under control, processes sorted and cash flow sorted.