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Effective Strategies to manage Debtors Posted on October 9, 2018
Setting up credit controls and better managing debtors will improve your chances of payment when things go wrong for customers.
The following tips can be implemented to ensure appropriate controls over debtors;
Set up credit controls
Ensure you have efficient processes in place and stick to it. It’s much easier to follow up on slow payers if your trading conditions have been clearly laid out from the beginning.
Encourage customers to make payment directly to your bank account.
Know your customer – use reference and credit checks on new customers. A slow economy can indicate financial trouble for any business. If your customers are having these issues, there’s a chance they will not be able to meet their financial obligations to you.
Follow up on all slow payers. Make a note of the decision maker in the business and call them direct if payments are not being met.
Automatically send 30, 60 and 90 day reminder letters insisting on your trade terms being met. If you have no response, follow up again with a phone call. Don’t finish the call unless you have firm commitment to make payment.
If accounts are not being paid, supplies should be stopped. This should be part of your credit system. You may then discuss with the customers and perhaps reach an understanding regarding scheduling payments for past and further supplies.
If necessary, use a professional debt collector and be prepared to send demand letters or threatening legal action.
These tips may seem obvious upon reflection, however many businesses are getting bogged down by not having an efficient process in place.
Remember – you may have won the sale, but getting paid is just as important.
If you would like to learn more about how you can manage your debtors, click here to email your three biggest challenges.