Managing your debtors is vital when it comes to increasing cash flow. Perhaps you are finding that your numbers are not quite where you would like them to be? The first step is to learn about accounts receivable performance indicators, how they interact with each other, and what those interactions mean for your bottom line.
Debtors represents the total amount of money you are currently owed by all customers. Debtors are represented on an accrual basis.
Less than 60
Although it’s important to note that this will vary across industries so it’s important to know what your industry target should be.
120.00% of 12 Month Average of Sales.
How to keep your Debtors above the target
Managing your debtors so you get paid on time is critical to your business’ survival. Paying suppliers and salaries, investing in infrastructure and growth – if you don’t have the cash, your business is in trouble.
So, wouldn’t it be wonderful if customers paid on time, every time?
Here are a few different things you can do and small changes you can make to improve your metrics and overall accounts receivable performance, such as:
Developing, refreshing, or re-evaluation your credit policy
State payment term upfront
Standardising your credit collections communications with templates
Making sure you have the right number of employees focused on the task
It goes without saying you need to keep debtors under control as often as possible. It’s not always that easy but maintaining a fast turn around on invoices is a key action to help you not just survive but thrive.
I encourage you to create a report or a dashboard that gives you all your figures whenever you need them. If you don’t have the time or resources to make that happen then sign up for Blue Bean today and you’ll see your metrics within a few minutes.