Delivering Happiness To Clients

Never a favourite activity of business owners, collecting outstanding debts, increasingly, is a key factor in business survival. Getting paid on time is optimal, but far too many business owners allow themselves to be exposed to bad payers. But, as the saying goes ‘every cloud has a silver lining’ and the silver lining for accounting and bookkeeping professionals is to leverage their skills and solve this most pressing of problems. It’s an opportunity for the trusted adviser that they understand the business inflows and outflows accordingly and be in a position to offer solutions.

 

The opportunity

Most SMBs simply do not have the internal processes or the applications to protect themselves from slow or bad payers and it is almost a given that the business owner has no time to put together a concerted effort to collect outstanding debts in an organised manner.

The older a debt is the greater the chance that it will become a bad debt. Debts left ageing for more than 60 days, reduce the chances of it being paid.

Although many bookkeepers would rather keep the heads down and not stand in the line of fire between recalcitrant debtors and agitated business owners, there are resources and services at hand that can assist the business owner in better managing their cash flow.

Screen the new customer

No business owner wants to say ‘no’ to a new client; but screening new clients using a credit reporting agency may save money in the long run. It’s one of several ‘tools’ that the bookkeeper can bring to the business owner. A credit report from an agency such as Creditor Watch enables businesses of all sizes to access credit reports on any company in Australia to determine what sort of risk they represent to their business.

The point is to utilise debt collection tools such as letters of demand, which will help improve business cash flow. These tools are invaluable for business owners and managers with no credit management, AR or debt collection experience.

Systems for dealing with debtors

There are fundamental lessons to be learnt by business owners as well as their trusted advisors; and there are applications and tools that can be promoted by the trusted advisors. Simple lessons include:

  • Consider a credit report on new customers, giving a good indication of their credit worthiness
  • Have clear credit agreements with customers and suppliers; adding in collection costs
  • Have a system for keeping a real-time aged debtor ledger
  • Incorporate a systematic activity to chase overdue invoices, triggered the day after due date. Ensure that this is a written procedure and stick to it.

Source – (www.linkedin.com/pulse/delivering-happiness-clients-morris-kaplan)

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