Invoices paid on time? Ensure good debtor management.

Good accounts receivable management is essential for any business. But what does that mean? And what is the best way to get started as an entrepreneur?

What is debtor management?

Quite simply: accounts receivable management includes all activities that ensure that your customers pay your invoices on time.

Why is good debtor management important?

Non-payment can lead to serious liquidity problems and in the worst case, even bankruptcy. But accounts receivable management goes further than encouraging defaulters to pay.

You also want to know why your customer doesn't pay. Is there an administrative error on your invoice? Has your product not arrived or has your service not been delivered correctly? There are many reasons why someone can't or won't pay an invoice

How do you handle accounts receivable management?

Write down guidelines for your company. Think about these questions:

- What kind of customers do you accept, based on what conditions and criteria?

- What kind of customers will you monitor before you go into business with them?

- Which customers will you stop working with and from what moment?

Write down guidelines for your company

Below, we give you a number of additional tips for good debtor management.

Tips for good debtor management

  1. Be customer-oriented and think commercially

    Always keep in mind that any customer can potentially become a defaulter. Therefore, always try to think along with them and guard the good relationship. If your client has a payment problem, work with him to find a solution. But don't be naive either. Agreements made must be kept.
  2. Make payment as simple as possible

    Make it as easy as possible for your client to pay. For example, replace an invoice on paper with a digital version. Or provide both.
  3. Determine the creditworthiness of your customer

    Before you start working with a client, it is good to know his creditworthiness. There are a lot of players on the market who can help you with that. If a client doesn't score well right away, maybe work with prepayments or partial prepayments. But also remember: creditworthiness is not a stable situation. Re-evaluate the creditworthiness of your customers from time to time.
  4. Use a clear invoice

    Provide a clear, conveniently arranged invoice:

    - the delivered service or product

    - the order numbers or PO numbers

    - the payment deadline

  5. Send your invoices on time

    Why wait to send your invoice? Did you provide a service or product? Did a subscription expire or reach a certain milestone? Then that's the time to invoice. Not the end of the month.
  6. Send a reminder in time

    If the payment term is exceeded, it is best to send a reminder to your customer as soon as possible. In this way, your payment arrears are kept to a minimum. 
  7. Call your debtor

    By calling you find out in a personal and direct way why an invoice hasn't been paid yet. Make sure that you also always request payment by mail or letter. It is important to have something on paper.

    What is the best way to handle a telephone conversation like this? In this article you will find some good tips.

  8. Urgent the "total outstanding balance" back

    Using the "Days Sales Outstanding ratio" (DSO ratio) you know the average number of days it takes a company to get an invoice paid. The shorter this number of days is, the better your company performs.

    At Unpaid, we do everything we can to improve your DSO ratio.  Via our website, you can fully collect your unpaid B2B invoices online. What's more, we let you know at once whether the invoice meets all requirements. Give it a try and submit an unpaid invoice below.

    Do you have an unpaid invoice and do you have questions about the operation of Unpaid? Call +32 9 396 34 00 or let us know here when you want to be called.

    Ready to start collecting?

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