Are you behind on your debt collection?
Many of our clients say that debt collection is one of the items on the to-do list that they most dread! Who wants to spend time on the phone calling up late payers and asking them for money? We've found some smart ways to help small businesses keep on top of their debtors and ensure they don't have their cash tied up in the hands of their customers.
- Keep an up to date ledger - if you don't know what's outstanding you can't collect on it. We like Xero because it allows us to have our sales ledger up to date at any point during the month - not just when the bank statements have arrived. This lets us chase debts at any time during the month so they don't get too old.
- Regularly reconcile your bank account - Xero lets you do it daily. This is a great discipline to get into so that it never becomes a massive chore.
- Send out statements - if your customer has missed an invoice you aren't going to find out unless you send them a reminder. Regular invoices ensure nothing is missing from their ledger too, and it gives you a chance to match up any odd payments.
- Talk to your cutomers - don't be afraid of picking up the phone and having a chat - it's often the fastest way to resolve a late payment and also a chance to find out why they may have missed paying you. Are your invoices going to the wrong person? Is there a better way to send them, for example by email rather than post?
- Offer the payment methods that your customer wants - do you only accept cheques and bank transfers, when your customers would rather have a Direct Debit? There are some great, low cost options for collecting money, such as Paypal, Stripe ( for taking card payments without the need for a terminal) and GoCardless for Direct Debit. Talk to us for more about how to set these up.
- Utilise clever software - such as Debtor Daddy which automatically chases your debts on a regular basis via email until they are paid. Try it for free here