Have you had months where your sales have been solid or even better than usual but regardless of how many leads you convert and new invoices you raise, it's just not reflected in your bank balance? Well you're not alone. There are many factors that contribute to poor cash flow but one of the big ones is customers/clients that don't pay their bills on time (if at all).
This is a challenge faced by every business that offers their clients payment terms other than Cash on Delivery. Businesses offer payment terms in good faith that customers will uphold their end of the deal and for the most part, they will pay on time, however there will be some that take advantage of your goodwill and drag their feet. Collecting delinquent debt costs you time and money whilst having a substantial impact on your cash flow.
A good way to look at debt collection is that a sale isn't a sale until you have been paid. Customers will delay payment because holding off on paying you is cheaper than digging into their bank overdraft. You're offering them cheap credit, but you're not in business to finance someone else's growth. Always remember, you're not a bank, so don't let them treat you as one. Converting sales into cash is key to securing your future.
Being proactive with regards to debtors is much better than being reactive. With this in mind, here are some easy tips to help get control over your debtors: