Are you running a successful business, but you never seem to have money in the bank? Do you have a large trade debtor’s balance (that is, lots of money owed to you)?
It is important to chase up your debtors in a timely fashion, to keep your cashflow in check.
When and how often should you chase up debtors?
As a standard, once the invoice has gone over the payment terms by 7 days, you should start chasing them up. After the initial chase up, you can follow them up weekly or monthly depending on their situation.
Apart from improving your business cashflow, chasing up your trade debtors will also reduce the likelihood of bad debts and your business missing out on much needed cashflow. If customers cannot pay back the whole amount in one payment, you should suggest a payment plan.
If you have outstanding invoices you can email your customers, or give them an old fashioned phone call. Chasing outstanding invoices on a consistent basis helps your customers realise that if your invoices are not paid on time, they will receive a reminder!
Automated Reminders with Xero
If you are using Xero, there is a nifty app called Chaser.
And Xero has just added a debtor reminder feature.
Both of these will automatically chase up your debtors after you’ve set it up for your preferences.