Top ten tips for improving your debtors – Tip nine
In many businesses, the ability to manage cash flow is crucial to success and as a result of manual and repetitive processes, management of the debtors is often a ‘painful’ task.
The recent turbulent economic environment only adds to the headaches of a credit control team and the introduction of effective tools to improve the collections process is arguably more important today than at any time in recent history.
Effective credit control and query management should enable your business to;
- Improve cash flow
- Reduce debtor days
- Increase customer service
- Cut the cost of cash collection
- Eliminate manual processes
- Speed up the query resolution process
When chasing payments, a customer will often promise to pay certain invoices on a specific date. A controller will typically make a note of this and perhaps insert a reminder in their Outlook diary to check the customer has delivered on their promise.
By raising a promised payment event, the controller may link together invoices that the customer intends to pay, generating a total promised amount, together with the date by which the customer intends to make the payment. On receipt of a payment from the customer, the operator will be prompted to allocate the cash based on the details of a previous promise, thus automating the allocation process and saving time. This also results in the promised event being updated as complete and also records the timeliness of the promise (early, on time, late) for further analysis.
Promised payment events that are not fulfilled will appear in the credit controller’s workflow to prompt a call to remind the customer. The resultant analysis of promises may be used to encourage customers to pay on time and more importantly to assist with cash flow forecasting.
Like this? The tenth and final tip coming next week!!