At this time of year many businesses feel the strain of being paid from the before Christmas rush. Having outstanding amounts owing from Customers (Debtors) can put additional pressure of the cashflow of a business, so effective management of this is crucial.
Tips to improve debtors:
1. Make it easy for customers to pay – effective invoices are:
- Sent promptly instead of waiting till the end of the month
- Show all the necessary details (produce & service details)
- Provide multiple payment options and are easily identifiable
- Sent to the correct personal (so they don’t get lost)
2. Make following up a routine – having a system to follow up outstanding accounts in a friendly and non-threatening manner is key. This may be done every week/fortnight – don’t just wait till the end of the month to chase these up.
3. Make your terms very clear – ensuring the due date is clear and not too long (ie 7-14 days) will give the customer a clear view of payment expectations.
4. Get staff involved – ensure staff are aware of the payment terms and check new customers are credit worthy. Incentives could also be offered for task to improve debtor days.
5. Go digital – this can allow you to keep track of all communication with customers as well as being able to quickly and easily locate/email invoices or statements when needed.
We are a small business accounting service located on the beautiful Sunshine Coast and would appreciate the opportunity to help you, your friends, family and colleagues. Contact us on 07 5451 1118 for an obligation-free confidential discussions today.