For any business, good cash flow is essential to success. In an ideal world, you’ll get paid as soon as you send that invoice, and you’ll always have enough money to pay for the services your business uses as well. However, in the real world, this is not always the case – sometimes you have to chase payments, or on the other hand, suppliers can be chasing you.
Here at 3rd Arm Admin, we’ve seen a lot of horror stories. We’ve also learned that with thorough preparation and the right systems, dealing with debtors or creditors doesn’t have to be a terrible experience. We’ve put together a guide on how to deal with debtors and creditors based on our extensive experience with business bookkeeping and receivables management. Read on below!
Chasing someone up for money isn’t necessarily a very pleasant experience for both parties, but it has to be done. When it comes to debt collection, taking a pragmatic yet sympathetic approach will always get you on the debtor’s good side. If they are unable to pay for a variety of reasons, make sure you listen attentively and are sensitive to their feelings so they don’t feel uncomfortable, or worse, threatened.
Here are some steps and points to consider when handling debtors:
Paying for goods or services on time is one of the responsibilities of running a business. However, some things can, and do, go wrong, especially if there is no set system in place for reconciling creditor statements and managing your cashflow. These can all lead to unwanted complications such as a call from the debt collector. It also makes it incredibly difficult to ever know where you stand financially and manage your cashflow.
Here are some steps and points to consider when handling creditors:
When it comes to dealing with either debtors or creditors, up to date and accurate bookkeeping is the best way to ensure you cover all bases. While it is a legal requirement to ensure you keep all invoices it is best practice to also keep packing slips, records of phone calls, emails and any other useful documentation. These will all prove useful to have in your arsenal and also ensures you know exactly what is going on. It is very difficult for people to dispute fact. Accurate, well organised and up to date bookkeeping will assist with good cash flow on both ends so your business can operate smoothly.
If your business is having trouble with receivables management or lacks a comprehensive bookkeeping solution, 3rd Arm Admin can provide you with a comprehensive bookkeeping service to suit your needs. Rest assured that we’ll lighten your load and give you more time to dedicate to growing your business.