Reducing your companies Debtor Days will improve cash flow, reduce the risk of bad debt and decrease financing and interest costs. So there's a lots of reasons to do it! But how?
Improve the flow of documentation. If you are presently raising invoices once a week consider raising them once a day. The faster your debtors have them the faster they can pay.
Go digital! If you must have proof of delivery dockets or signed invoices scan them immediately and your time spent filing and finding dockets will be reduced by up to 80%, This will allow you to provide the documentation your customers need fast as well as reducing the write off's from missing documentation. Do My Books have an IT partner who provides an excellent scanning solution. Contact us if you need further details.
Keep track of what your doing. Every time you contact a debtor by phone or email log the communication in your accounts or CRM package. If you don't have one or don't know how to do this contact us we'll help you out. This will allow you to see the debtors you are spending too much time calling and if you are not around it will allow your partners and colleagues to see who you have been calling.
Offer a settlement discount. If you are paying large overdraft interest rates it may bebeneficialto offer your debtors a small discount for paying within 30 days say 1.5%.
Email Statements. I've been in so many offices and seen people trying to fold,envelopeand put stamps on 500 statements. WHY? Email them to your debtors save at least 55cent on each statement from postage let alone time spent, printing and paper. You will also have an electronic record of when the statement was sent so it cant get lost in the post'. Use technology work smarter! If you don't know how to email statements again Phone us we can help you SAVE!
Badger people. This is unfortunate but it works. If a debtor is slow to pay you have to badger them, Phone ever day don't stop until you have been paid. You might befrightenedof loosing a customer but a saleisn'ta sale until its paid in full.
Sometimes in credit control you have to badger your debtors!
Work fast. There's no point in chasing a debt for two years to find the company has gone into liquidation . If your not having any luck in collecting a debt go legal as soon as possible.
Monitor the situation, Calculate your debtor days monthly and watch them very carefully. If you don't they can easily get very high very fast.
Call in person. This is not pleasant but it works. Tell your debtor your passing by so you'll call in to collect the cheque. They wont like it but it often works
Incentivise your staff, If you have sales people working oncommissionhold back a percentage of their commission (or it all!) until the invoice is paid. This will give them an incentive to get involved int he debt collection process.
Without a doubt 2010 will be a though year for Irish SME's but by working smarter you can ensure your business not only survives but thrives!
If you need any advice on your software, processes or generally debt collection feel free to contact Ralph for a free consultation and business review on. We can also provide training on improving your debt collection process.