Debtor days seem to be a natural part of any business. We spend weeks following payments up, or we’re hesitant to be too ‘pushy’ when chasing payments due to the relationship with a client. This may be just a part of doing business, but do you really know how debtor days are affecting your business? What if we told you that they can have significant effects on the success of your business...
Less Cash Flow
If you’re not getting paid, there is less cash flow in your business. When there is less cash flow, you are more likely to unnecessarily dip into savings, or the owners needing to invest more money into the business. You will also have less cash available at short notice.
This can result in reduced rates of growth and it will affect the success for your business.
Like it or not, cash flow management is essential for business growth. Cash flow gives you flexibility, and the ability to invest time and money into areas of growth. If you aren’t getting paid, you also won’t be able to upkeep your resources to continue servicing clients efficiently.
When there is less cash flow and resources are tight, it can create a very stressful business environment. Less cash flow means you are less likely to pay your own bills, which is not a situation many business owners want to find themselves in.
You may find that you need to borrow money or invest some of your own money into the business, which in turn increases your debt.
The longer you leave your debtor days, the more likely it is that you and your payees forget about payments. This, again, leads to less cash flow and more time spent chasing details about forgotten payments.
Keeping on top of your payments and limiting the number of debtor days in your business can benefit you with better debt management, increased cash flow, business growth and less stress. Discover how you can improve the effectiveness and efficiency of your invoicing system, or learn how Apxium can help you manage your debtor days.