By Paul Maddison
Owner of Bookkeeping Intelligence & Finance Manager at Fredericks Foundation.
Here are 12 top tips to help you manage the money owed to you and rightly have the cash in your bank account and not that of your customers. After all, you are not a lender and cash in your accounts gives you better options.
1) Measure your debtor days - not just the number of days it takes to collect your debts on average, but also the value of lost cash to your bank account that someone else is using, usually for free.
2) Send statements to your customers at least monthly and the first statement should be before the actual invoice falls due.
3) Don't be afraid to write / call and ask for the monies due to you.
4) Produce accurate information and paperwork, as an easy delay tactic is to state a missing invoice or credit note.
5) Have good terms and conditions that give you control, especially to retain ownership of product.
6) Have an audit trail of delivery. Delivery notes signed for products or something like a time-sheet for service businesses.
7) Have an application form for credit and start new customers or start-ups with 'cash on delivery' or short managed terms until the relationship is established and known.
8) If considering legal action, then ensure you can evidence that the customer understood the offer / product, understood the pricing & terms, and has received delivery.
9) Undertake vetting of your new credit customers.
10) Use credit limits and be aware of customers taking extended terms to fund their lack of working capital.
11) Share experiences with other credit controllers.
12) Stay in control when collecting your money. Record conversations, refer to them and know the excuses.