Slow and non-paying customers can be detrimental to the cash flow of a business. Here are 6 tips for all business owners and accounts receivable managers to effectively manage debtors.

 

Before you take on a new customer, it’s important to check their history for any adverse information that could affect you as a creditor. Avoiding slow and non-paying customers will help safeguard your cash flow by minimising the risk of bad debt.

 

Make sure all customers agree to your credit terms in writing. Have a formal plan for collecting payments and stick to it. Always provide an invoice on delivery and ensure all the details of your debtor are correct. Setting up timely reminders to provide statements and follow up calls will train your customers to pay on time.

 

A big sale can put pressure on a business to acquire additional resources in order to meet the demands of a large-scale project.

Requesting a down payment or adjusting your terms can help alleviate financial obligations that include purchasing more inventory and hiring extra staff.

 

It’s difficult to review the creditworthiness across all existing customers at any given time. Automated customer monitoring will alert you to important changes that could impact timely payments, and ultimately your cash flow. Such changes include a customer defaulting on payment with another company, going to court or receiving a winding up notice from the ATO.