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The process in which a company manages its payment is called debtor management. This starts with setting up the processes and ends with receiving the final payment. Current invoices are thus identified, checked and reminded where necessary. These steps are repeated until payment is completed.
It is important to consider the customer relationship in every step. After all, a good relationship is more likely to stick to its payment commitment. To avoid unexpected surprises, you can set up a credit information check perform to check whether a potential customer is creditworthy.
Accounts receivable management can be captured in the following steps:
Checking whether a potential customer is creditworthy. Based on this information, an appropriate payment arrangement can be made, or a decision made to discontinue a collaboration.
After delivering your product or service, you can invoice. Do this on time to maintain a healthy cash flow.
After you have invoiced, it is important that you periodically check which invoices have been paid. Thanks to this periodic check, you can identify in time when an invoice is overdue.
In the unlikely event that an invoice does not get paid, sending a friendly payment reminder is important for maintaining a good customer relationship.
Have you still not received payment after several payment reminders and a final warning? Then start an collection procedure to mitigate your risks.
To keep an overview and see which debtors still require action, it is advisable to keep track of payment statuses and receivables in a report.
Overarching, it is important to maintain open, clear and friendly communication towards customers. Through good customer contact, you can prevent non-payment, or expedite payment.
It is often the small steps that lead to bigger results. Within debtor management, these are things like collecting credit information, pre-arranged payment terms, setting up a proper collection procedure and timely follow-up when payment seems to be delayed.
To support the whole thing, it may be valuable to investing in debtor management software. This software supports debtor management by automating repetitive operations and sending updates on status changes.
Accounts receivable management is not just about collecting money. It is important to remember that taking a hard line on your debtor management also affects your customer relationship. By showing understanding for your customers, you build trust and loyalty, which is a strong foundation for further cooperation.
Good debtor management takes time, requires expertise and technological resources. Depending on the resources you have available within your company, it may be valuable to outsource your debtor management to a professional party.
As an added advantage, you get the expertise and experience of an entire organisation behind you that looks beyond just your debtor management. In fact, an external party can help you further optimise your cash flow and available working capital. This process is also called credit management and helps you reduce financial risks across the board. Are you curious about the advantages and disadvantages of outsourcing your credit management? read this article.
Optimising your receivables management hinges on the right approach, tools and the right people. Should Xolv pick up your debtor management, these are the first things we look at:
At Xolv, we understand that good debtor management is difficult to balance with good relationship management. We are happy to help you find the right balance for your organisation. Contact us to find out how we can contribute to your success.
We are happy to help you optimise your accounts receivable management and build lasting business relationships.
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