The importance of keeping debtor days down
As a business owner, it’s crucial to keep your debtor days down to maintain a healthy cash flow. Debtor days refer to the number of days it takes for a customer to pay an invoice. The longer it takes for a customer to pay, the longer it takes for you to receive payment and the more it can affect your cash flow.
Fortunately, there are steps you can take to keep your debtor days down and improve your credit control process.
Spotting the signs of trouble
The first step in improving your credit control process is to spot the signs of trouble. There are several signs to look out for that may indicate that a customer is having trouble paying their invoice.
For example, if a customer is not answering calls, asking for copy invoices, trying to pay by cheque, or paying from a different account or personal account, it may be time to start thinking about your debtor days.
Steps to take
Once you have spotted the signs of trouble, there are several steps you can take to improve your credit control process.
The first step is to share communications as a team. This will help you stay on top of the situation and ensure that everyone is aware of the status of the invoice.
It’s also important to understand the client’s sector and be empathetic and compassionate to their situation. However, it’s important to ascertain whether your kindness is being taken advantage of.
If so, act immediately by monitoring credit levels you have granted to a client and resolving any disputes promptly.
Credit management: How tough should you get?
There are two main ways to approach credit management: the carrot and the stick. The carrot approach involves incentivising prompt payment by offering discounts or other benefits to good customers. The stick approach involves penalising bad customers, such as those who pay late or at all. Both approaches have their advantages and disadvantages, but it’s important to know when it’s appropriate for each one.
Timing is everything, especially when going with the stick method of credit management. It’s important to avoid threatening your debtor too soon after they’ve made a purchase from you. Instead, wait until some time has passed before taking any action, such as threatening legal action. This way, you can reduce the chance of the debtor feeling threatened and potentially harming your business relationship.
If you find you need help with debtor days, Jacksons CRS can help!
Jacksons CRS is a trusted credit control and debt recovery company with a team of experienced professionals who can help you improve your cash flow and reduce debtor days. Our range of services includes credit control, debt collection, and legal services, all tailored to your individual business needs.
With a transparent and ethical approach, backed by membership in the Credit Services Association (CSA) so you can be confident that Jacksons CRS will handle your credit control process professionally and effectively.
What does JCRS do to improve recoveries?
At Jacksons CRS, we take several steps to improve recoveries.
For example, we offer short-term payment plans, prompt escalation of any issues where bad debt is apparent, and letter before action from a solicitor where necessary.
Automating your processes for receiving your collectibles is also crucial.
It ensures that they are received quickly when they are due and late payments are dealt with immediately by escalating them through to management or legal teams if necessary
Keeping your debtor days down and improving your credit control process is crucial to maintaining a healthy cash flow. By spotting the signs of trouble, taking the necessary steps, and automating your processes, you can improve your chances of recovering any bad debt.
If you need help with debt recovery or credit control the professional, diplomatic team at Jacksons CRS can help.
Contact us today on 01603 319034 or email: info@jacksonscrs.co.uk for a free no obligation chat about your needs and how we can help.
