Over the years I’ve noticed that one of the big things that business owners and, surprisingly even some bookkeepers, hate doing is chasing debtors. Some people are embarrassed about asking for money and others think it will damage their relationship with customers.
I’ve also learnt over the years that prompt chasing of payment makes it so much easier to collect and has a massive impact on business finances and cash-flow.
There are a number of benefits of passing the task to a third party and chasing proactively:
If you use a third party, debt chasing can become a regular and proactive occurrence. As a business owner, you may not have time to review and chase debtors on a regular basis. Use your bookkeeper to chase debtors and ask them to do this monthly as part of the month end financial process, that way nothing becomes too out of date.
Give your book-keeper an accounts@ email address. It makes the company look bigger than it might be i.e you have an accounts department, and it de-personalises it, as the business owner, it is not you asking for the money personally.
Someone who chases debtors on a regular basis, knows the best approach, can un-pick where historic book-keeping mis-allocation of payments may have been made, and knows when to get tough to recover the money.
Getting money in quickly has a massive impact on cash-flow and ‘cash is king’. For example, if you are paying your suppliers on 30 days, but not getting your money from customers for 60 days, then this can put the business in a difficult cashflow position.
Very rarely do I come across a case where the business can’t or won’t pay the debt, more often it is a case that the invoice hasn’t reached them, or it has been forgotten, and a gentle reminder is all it takes to get it paid promptly.
So if it’s not something you have time for or don’t like doing yourself, then please consider outsourcing it, it could have a dramatic impact on your business cashflow!
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