Having a large amount of debt in your business is bad for cashflow, weakens your overall financial health and brings down your credit score as a business.
So when customers don’t pay on time, that ‘aged debt’ is bad news for your finances. Aged debt can begin to stack up, adding to your liabilities and reducing the health of your overall balance sheet – so it’s important to tackle late payment head on.
Get effective with your credit control
Being proactive with your credit control procedures and debt management helps you speed up payment, reduce your debtor days and rein in your overall debt as a business
To improve the efficiency of your credit control:
- Make your payment terms clear – state your payment terms on all invoices and create a credit control policy that’s part of the terms & conditions that customers sign up to.
- Run regular debtor reports – check your list of late invoices to see which customers are the late payers, and where the big debts are that need to be collected.
- Be proactive in chasing late payment – don’t be shy about asking a customer to pay their bill. Set up notifications and schedules to remind yourself to chase late-payers.
- Automate your credit control tasks – cloud accounting platforms have built-in tools or automated credit control integrations that can automatically chase your late-paying customers as soon as an invoice is overdue.
Talk to us about enhancing your credit control
If late payment and aged debt is weighing heavily on your balance sheet, we’ll help you set up the debtor reports and credit control processes needed to reduce this debt. Reach out to your THG team member or contact us for more information.