April 05 2023
Effectively Managing Your Debtors and Creditors
Cashflow is the lifeblood of any business, large or small. Achieving a healthy cashflow means having both debtors and creditors managed effectively. Here we’ll look at to develop invoices, manage your debtors, pay your creditors, and build strong relationships with them.
Developing Invoices Accurately
Invoices should be developed accurately and sent out promptly for payment. Having a standard template for your invoices that includes details such as contact information, GST (Goods & Services Tax) number, payment terms and conditions can help ensure that you receive payment in a timely manner. Many businesses use software programs to generate invoices which help to streamline the process. It is also important that you keep accurate records of all past and present invoices. This will make it easier to track who owes you money in the event of any overdue payments or queries.
Know who you’re doing business with and reduce risk
By running a credit check on a business you’re trading with, will set you up in good stead when it comes to understanding their payment ability. You can run a simple or comprehensive credit report using bzTrack and CreditorWatch to know if a business is financially healthy or if they’re likely to default on payments. By planning ahead, you’re in a much better position to set payment terms accordingly and understand any risk associated with that company.
Managing Debtors
It is important to stay on top of who owes you money so that you can chase up on unpaid invoices as soon as possible. Set reminders for yourself when payments are due so that you can take action if necessary. You may need to send out regular statements to remind customers about overdue payments or contact them directly if more urgent action needs to be taken. Be polite but firm in your communication; this will help maintain good relationships with customers while ensuring that they pay what they owe in a timely manner.
Paying Creditors
It is important to establish good relationships with your suppliers by paying them on time whenever possible; this will ensure that they continue to provide goods or services without disruption and give priority attention if there are any issues with orders placed by you. If cash flow becomes an issue, it’s best practice to communicate openly with suppliers about potential late payments so that arrangements can be made for delayed payments rather than just missing them altogether. Keep accurate records of all past transactions with suppliers as this could also come in handy when negotiating discounts or payment plans in the future; however, always strive to pay within the agreed-upon timeframe whenever possible.
Having effective systems for managing debtors and creditors is essential for achieving good cash flow in any business setting. Developing accurate invoices promptly, keeping track of who owes money, chasing up overdue payments politely yet firmly, and building strong relationships with suppliers by paying on time whenever possible are all key elements of successful debtor/creditor management strategies. Keeping accurate records at all times makes it easier to stay on top of both debtors and creditors while helping maintain positive customer/supplier relationships over the long term. Taking the time now to set up these systems can save a lot of headaches down the line!
Sign up to bzTrack to take control of your business cashflow today https://www.bztrack.com/signup
