“If you do not change direction, you may end up where you are heading.” –Lao Tzu
Having outstanding debt impact a large chain of consequence for a business, resulting in discontinuation of operation and change of business. That is because the inverse connection between outstanding unsecured debt and cash flow is the reason for cash flow representing a very important risk issue in the respondent company today.
Here are ways to improve your debt management;
1. Set out a day-by-day strategy
2. Decide your process for late payments
3. Train staff
4. Ensure policy is stuck to
5. Communicate this policy to all customers
6. Assess your performance
7. Compare your performance to industry norms
8. Make necessary changes
9. Know what you can afford to offer on credit
10. Ensure you have adequate resources to do it well
11. Learn from your competition
12. Get the right balance
13. Use account opening forms so as to know your customers
14. Know the full registered business name
15. Check the business VAT number
16. Work out what debts you have and what they total
17. Compare what you earn, owe and spend
18. See if you can consolidate your loans into one
19. Pay your debts on time
20. Try to pay the full amount outstanding rather than minimum owing
21. Look at whether you can afford to make extra repayments
22. Shop around for a better deal
23. Have a back-up plan
24. Know you can reach out
25. Put checks and balances in place.
26. Make upfront payments your policy.
27. Set your payment terms – and stick to them.
28. Offer incentives for early payers.
29. Up to date systems and processes
30. Prevention is better than collection.
31. Send out your invoices promptly
32. Work with the professionals.
33. Confirm who invoices should be addressed to
34. Know who is responsible for accounts payable
35. Perform a credit check on application
36. Credit check long-term customers too
37. Check when large businesses pay their suppliers
38. Look at their filed accounts
39. See if they are a Prompt Payment Code signatory
40. Build strong relationships
41. Keep in touch
42. Say thank you
43. Look out for warning signs
44. Keep a watch on industry news
45. Use credit circles
46. Set expectations
47. Train employees to flag any odd financial behaviour
48. Send as soon as possible
49. Use e-invoicing
50. Ensure it’s addressed to the right person
51. Display credit terms prominently
52. Include exact payment date
53. Offer a range of payment methods
54. Discuss any additional fees before sending
55. Make a courtesy call to confirm receipt
56. Pay particular attention to foreign debtors
57. Explain your procedure for late payment
58. Know who you owe money to and how much
59. Put together a monthly budget
60. Decide which debts to pay off first
61. Pay what you can
62. Curb irrational or impulsive spending
63. Consider debt consolidation
64. Pay your bills on time
65. Have liquid savings
66. Have a budget in place
67. Watch interest rate risk
68. Have an emergency fund for backup
69. Pay particular attention to your late payment procedure
70. Consult an expert
71. Spread your customer base as widely as possible
72. Keep on top of your sales ledger
73. Know exactly when every invoice will exceed terms
74. Identify proportion of invoices unpaid beyond agreed terms
75. Update cash flow forecasts
76. Implement plans for cash flow gaps
77. Update technology
78. Consider credit insurance
79. Consider invoice finance
80. Maintain a strong relationship with your bank
81. Negotiate with suppliers
82. Incentivise sales teams only once cash has been collected
83. Encourage early payment
84. Regularly benchmark suppliers
85. Regularly benchmark suppliers
86. Charge late payment interest
87. Focus your attention on high-risk debts
88. Target older debts
89. Compile a stop list
90. Get rid of repeat offenders
91. Don’t be bullied into accepting poor payment practices
92. Know your limits
93. Improve skills
94. Follow through on warnings
95. Report late paying customers
96. Ask for part payment
97. Don’t be afraid to confront the issue
98. Remain professional
99. Hire a dedicated credit controller
100. Consider outsourcing
A company focused on debt management enables you to come up with a plan to deal with your financial obligations proficiently. To ensure that your finances improve, it is essential you use a debt management plan.
You can make a debt management plan for yourself or go through credit counseling to help you with your plan. Both options have benefits as well as disadvantages. Creating a plan yourself is the easiest way forward, but sometimes it can be easier to have an objective third party devoted to helping you or making sure you’re on track.
“Rather go to bed supperless, than rise in debt.” -Benjamin Franklin
101 Accounting Action Guide Bookmayor Business business and enterprenursip business communication Business Management Business Principles Creativity Economics Entrepreneurship Finance General Guides and Advice Headline Health Human Resource Management Innovation Insurance Investment Law Leadership Marketing Networking Nutrition Personal Development PLR, MRR and RR Relationship Strategy Tips