This post is one in a series designed to help SME businesses benchmark their business and create a best practice business improvement plan across all of their business processes. You can find the links to the full series here.
Why is it important to ensure that you have best practice credit and debtor management for your business?
Debtors are people or businesses who owe you money. Effective management of your debtors (often referred to as credit management) will help you get paid faster and prevent bad debts. It will also help you maintain a healthy cash flow.
Credit management includes:
- Collecting debts on time
- setting credit limits and payment terms
- making credit applications and credit checks
- enforcing a clear credit policy
- considering debtor finance.
How does your business measure up?
Review your business against this best practice benchmark now
BEST PRACTICE BENCHMARK: We have strong debtor management processes which ensure that Debtors either pay on time, or are quickly flagged for collection actions to ensure payment. #Financial-Management #Risk
Here’s a checklist to help you determine how well your credit and debtor management processes stack up?
Approval of Work
- We always ensure that we have the appropriate customer approval for service performed and/or product bought
Knowledge of Debtor
- We have full knowledge about the individual or company we are giving credit to
Terms of Engagement
- We have clear terms and conditions on our sales contracts which include expectations for customer payment.
- Our customers are aware of consequences for late or non-payment
Invoicing and Payment
- We raise sales invoices promptly after completion of work.
- We encourage sales on the day and offer various payment options to assist this process
- We are aware and utilise cloud based debtor management system to assist with debt collection
- We have a clear process to follow up outstanding or disputed debts.
- We utilise a professional, full service debt collection firm when accounts are over 60-90 days (or earlier according to your terms) or to handle dispute resolution.
About the SMART-Connect best practice credit management and debt recovery advisor
Credit Management and Debt Recovery Specialist
Jeanine Purdie is the founder and principal of Business Credit Solutions which was formed to assist clients to get paid faster by reviewing their credit management processes and potential new client risk and to assist with debtor management and/or collection if required.
We have teamed with IODM, a cloud-based debtor management system to assist clients with their accounts receivable. Our collection arm is called Repaid! Collections. Our unique points of difference are competitive rates, high levels of customer service from a boutique firm, clients can log-on and get up-to-the-minute progress reports when required from our integrated debt collection system. We conduct WEEKLY EFT payments back to our clients after they have been Repaid! (with Trust statements for your records). We offer a no win/no fee for service throughout the collection process. We pre-quote for any additional services required eg field calls or skip traces to locate debtors and only proceed with your authorisation.