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Build a better business – Collect Your Debts

Cash is King

You wouldn’t believe how common a problem this is. It maybe that once the sale is made you move on to the next sale and also many people find collecting debts a distasteful exercise and so don’t prioritise it.

Remember A SALE IS WORTHLESS UNTIL THE MONEY’S COMES IN!

There are many businesses that run on overdrafts and paying extra interest due to lack of billing promptly and poor collection processes and procedures. In many cases the extra interest payments far out way the cost of employing a credit controller to reduce debt collection periods. Are you doing credit checks on prospective customers, are they high risk?

Do you have a process in place once a debt goes 30 days overdue, 60 days overdue etc. I have a lot of experience of even large companies that didn’t bother spending time and effort collecting debts once they were over say a year old. The companies just got into bad habits. I made an immediate impact by going after these old debts.

Any business MUST have systems and processes in place to assess new credit customers, make sure you invoice promptly and that the debt is collected on a timely basis in accordance with your terms and conditions. For unpaid debts there needs to be an adequate process in place and it needs to be followed.

You can always also use a debt collection agency and invoice factoring is also an option. It is often wise to separate the sales function and the collection function so that the business relationship is not compromised, but it depends on your business and the relationships you have with your customers.

Again I will re-iterate CASH IS KING. This mantra must never be forgotten as lack of cash is the number one thing that will definitely cause business closure very quickly

Disclaimer:

Paul Stankiewicz is the owner and principal at Paul Marks & Co Chartered Accountants which is the trading name of Paul Marks Ltd a Limited Company registered in England and Wales (registered number 4487645).This article is designed for the information of readers only and is the opinion of the author only. Readers should not act on any of the information contained in this article without seeking professional advice. Nothing in this article constitutes advice, nor does the transmission, downloading or sending of any information or the Material create any contractual relationship. Links to third party websites are provided as a convenience to the reader, Paul Marks Ltd does not control and is not responsible for any of those websites or their content. Paul Stankiewicz and Paul Marks Ltd accepts no liability or responsibility whatsoever for any loss or damage suffered by any user of the information contained on or accessed through this article or the Material downloaded.