Collect your Debtors Faster
Did you know that even though you haven’t collected your debtors, you still have to pay tax on them?
This is because you pay tax on your sales figures irrespective as to whether or not you have collected the cash. So use these ideas to collect your debtors quicker:
- Agree your payment terms at the time of sale
- Get terms of trade signed off in writing before you start the job
- Include a guarantee in the payment terms
- Invoice as quickly as you can
- Ask for a deposit
- Change your payment terms to 7 days or ‘on delivery’
- Send statements with only 2 columns – current and OVERDUE
- Follow up the day after the due date
- Put someone other than the business owner in charge of collection – owners are usually too soft!
- Document what your customers have promised in terms of payment and hold them to it
- Use a debt collector sooner rather than later – the longer you leave it the harder the debt will be to collect
- Stop credit for customers who are late on payment
How many of these ideas have you adopted in your business? How many are you actually applying?
Don’t procrastinate on your debtors.