Managing Debtors

17May10

Credit control should be proper for running  a business successfully. Late payments become  a challenge for many small businesses. If your turnover reduces, you will feel the effects of a sluggish economy. Managing your debtors effectively by following the below tips, will render you the positive cash flow that  you will need to magnify your business.

Set Up Credit Controls

Have a clear credit control process and stick to it. Use references and reports to check credit rates, Such checks should identify any new customers that have had bad credit experiences in the past, so that these can be monitored.

Know your Customers

Know your customer by providing them a form to be filled about their details and make sure they are able to pay their bills by getting a credit check on them.

Payment Options

Encourage customers to make payments directly into your bank account.

Monitor the Debtor Accounts

Monitor the accounts of new customers and rate them. Slow payers  can be found easily,  if trading conditions have been clearly laid out from the beginning.

Raise Invoices Accurately

Raise invoices as soon as the work is completed and don’t wait until the end of the month.Make sure you know to whom and where to send invoices and the detail they should contain.

Send Reminders

Make an option of reminding them about the payment at periodic time intervals.  And keep in touch with the customers,if necessary,  including regular telephone reminders.

Stop Supplies

Stop supplies, if accounts are not being paid. Make this part of your credit system. You can then discuss the situation with your customer, and reach an understanding regarding payment for past supplies and conditions for new supplies.

Allowing a good customer a little freedom  during tough times can be beneficial and promote good will with clients, going too far with payment extensions damages your ability to remain afloat.Do not be concerned about taking a disciplined action to debt collection because you are afraid of losing the customer. It is not worthy for having customers those who are not meeting the payment obligations.

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