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Our accounting experts recommend you do these two things this week to manage your debtors

by , 24 July 2014
When you run a business, good debtor management is crucial.

It helps you create sustainable profits. And that's because at the end of the day, you want to get your debtors to pay the right amount on time.

So where do you start when it comes to managing your debtors?

Our experts recommend you do these two things this week to manage your debtors so you can get your money quicker.

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Two things our experts recommend you do to manage your debtors


#1: Collect your debts immediately
 

The experts behind the Practical Accountancy Loose Leaf Service say that your administrative and other debt collection costs mustn't be more than the money you recover.
 

If you spend extra money on debt collection, you'll reduce:
 

  • Bad debt losses;
  • The average collection period; and
  • Interest payable on overdrafts.


#2: Manage your paperwork meticulously
 

Deal with sales paperwork promptly and accurately. If you don't, mistakes can creep in, which could cost you a lot of money to fix.
 

So make sure you do the following:
 

  • Send out invoices immediately after delivery, or if possible, with delivery. Also check that invoices are accurate. If this doesn't happen as promptly or as accurately as possible, disputes can arise and this can delay money being collected.
  • Investigate queries, complaints and credit notes swiftly.
  • Issue monthly statements early. If certain items aren't processed quickly, it can delay payments.
  • Use the age analysis function in your accounting package to follow up on long outstanding debtors.
  • Ensure that contact details of customers are always up to date.


There you have it: We hope doing these two things will help you manage your debtors effectively so you get your money quicker.
 

PS: If you want more tips on debtor management, be sure to check out the Practical Accountancy Loose Leaf Service or ask our experts questions at the Accounting & Tax Club.




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