How do you control your debtors?
A debtor is a party (either an individual or a company) who owes money to another party. Controlling your debtors will help your business get paid faster and avoid debt, which will also help you maintain a good cash flow. There are different methods you can utilise to ensure you have the best chance of making your debtors meet their obligations.
Make payment terms clear
When you send an invoice to your client, your terms should be set out clearly. Your quotes and contracts should also clearly address the terms of payment. Your terms should set out the time frame in which you expect to be paid. Consider having a due day of 7 or 14 days from the date of the invoice to ensure you are getting paid quicker.
Automate your billing, make sure you send invoices promptly, and send reminders
Your invoices should be sent out as soon as possible. You need to check that your invoices are being sent to the correct emails or addresses. Reminding your debtors regularly can be effective in ensuring your bills are paid. Your reminders should be friendly but firm. If your payment terms are not met, you should not be afraid to follow it up immediately with your client.
Build a relationship and know your customers
If you have a good relationship with your customers, it is more likely that they will pay their bills by the due date or repay their debt relatively quickly.
Make sure you can be paid easily
You should offer your clients a range of payment options that may be suitable for them, such as cash, direct deposit, a payment plan, online or in person. Your payment options should be clearly stated on your invoices.
Keep the process easy
You should use a software or system that automates most of the process for you, such as generating invoices and sending automated reminders. The system you use should easily let you see information from your debtors, such as if their invoices are overdue and what has not been paid. You should also be able to find your clients contact details with ease.