Improve your Cash Flow!

Cash flow is key for any business and a part of the process is keeping on top of the debtors however chasing debtors is a task that most people find difficult. It’s easy to stick your head in the sand and forget about it and focus on day to day business instead.

Cash flow is key for any business and a part of the process is keeping on top of the debtors however chasing debtors is a task that most people find difficult. It’s easy to stick your head in the sand and forget about it and focus on day to day business instead.
Did you know that debts over 90 days are unlikely to be recovered? So get on top of it before it gets out of hand.

Here are some tips:

1. Set up a game plan. Set aside one day per month, if you've got it in your diary it is more likely that you will remember and to go through with it.

2. Call the customer. The easy way out is to write a letter asking for the outstanding debt to be paid but it is also the least efficient way of reaching the customer. So lift the phone and call them!

3. Be prepared. Know what you are going to say before you make the call. Know exactly how much is owing, how long it has been outstanding for and what services/products were sold. Also know who you need to talk to. You are more likely to get a good response if you talk to the owner of the business than the administration staff.

4. Negotiate. Listen to what the customer has to say, be sympathetic but firm. They might have cash flow problems themselves. Suggest to set up an automatic payment to pay the debt over agreed time frame. Work something out that is going to work for both of you.

5. Follow up. If you made the call the prior month and the customer said they were going to pay all or some of the debt off and none has been received. Call again. The customer is soon going to realise that you are not going to give up.

Author: Caroline Tornqvist