As any small to medium business owner will know, cash flow is king - it literally puts the roof over your head.
Yet, cash flow is one of the biggest areas of struggle for many businesses. Consumers are reluctant to part with their money, even if it's to pay for your goods or services. As such, it can take a while for them to come through on their end of the bargain.
While longer debtor days might not be a big deal for huge corporations, for the rest of us, it can be a very real source of stress. You need your customers to pay you as quickly as possible so you can continue to run your business, so it's easy to find yourself working late into the night chasing up late-paying clients. But what is to be done about it?
At Apxium, we want to help you get more out of your work, and life. Here are 5 easy-to-apply tips to decrease debtor days and improve your debtor management.
Be Clear and Concise
When creating an invoice for a customer, be mindful of the clarity of your message. Is the due date hard to find? Does your invoice clearly state exactly how much is required? Have you addressed how can your clients pay you?
If your customers don't know how or when to pay you, they are more likely to push it aside for "later" - or never.
That leaves you to follow them up, they to contact you back... it goes on and on. If your invoices are crystal clear, you give your consumers the best step off point to paying you right away.
No more filing the invoice for a later date .We make it easy for the client to action and commit there and then with our “pay now” “pay on the due date” or “pay by instalment functionality”. We let you determine the pay by instalment frequency, ensuring it is complimentary to your business processes.
Charge Late Fees
We all know the panic of an overdue library book or movie - and it definitely incentivised us to return them on time.
So, why not apply the same logic to your invoices?
By charging a fee for late payments, you are putting in place a strong motivator. However, make sure that this fee is fully understood by your customers and that it's clearly visible on the invoice.
In the same way a late fee motivates your consumers, an incentive to pay on time is also a fantastic way to decrease debtor days. And, as the saying goes, you tend to catch more flies with honey.
Try offering a small discount on the overall payment or even some coupons to the local café or cinema. You'd be surprised what people will do when they're enticed by a carrot on the end of a stick. Your business gets paid faster, and your consumers are happy with their discount or special offer - it's a win-win situation.
Organisation is key in tracking invoices. Everyone has their own methods for keeping track of payments, however, this is an area where attention to detail is paramount. If an invoice gets lost or forgotten about, that could mean your business not getting paid for your hard work.
Spend some time analysing your current systems. Are they outdated? Slowing you down? Are pieces falling through the cracks? If so, then it's time to look at improving it. Automatic accounts receivable and cloud accounting software can help you to do this - if you'd like to learn more, you can do so here.
Move Your Systems Online
While having a standard follow-up routine for your debtor management is good, it does rely a great deal on you remembering who's doing what. It's a very manual task and can take a sizeable chunk of time out of your working week that could have been spent on other, more important things.
With an automated accounts receivable platform, you can keep track of who has what invoice, who has paid and who is outstanding. You can set up automatic reminders at crucial moments in the payment cycle and significantly reduce your administration time.
Integrated accounts receivable platforms like Apxium help you to get more out of your business, streamlining your processes so you can have more time, cash flow and opportunities. It doesn’t matter if your system is hosted in servers on your premises, Apxium’s solution sits lightly over the top to give you a cloud-based payment experience. To learn more about integrated accounts receivable and how it can help you, click here.
By implementing these 5 debtor management strategies, you can optimise your accounts receivables, decreasing debtor days as a result.
Would you like to learn more about how automatic accounts receivable can help your business? If so, you can find more information here.