Members can pay for the community and training subscription monthly, quarterly, or annually. This, along with the large influx of eager entrepreneurs, affects the number of invoices and the associated debtor work.
Manual Follow-up of a Large Invoice Stream
The organization uses its own payment system to create and send these invoices. Previously, the follow-up was entirely manual.
“We were typically a company that sent a letter to all outstanding debtors once every six months,” says Loorbach. “That barely yielded results. And with the manual follow-up, it could also happen that our company ended the year with 7% – 8% unpaid invoices.”
“If you send the payment reminder only after six months, many customers ignore your letter or email. They take the risk; after all, you weren’t on top of it last time either. ‘That reminder can wait a bit longer,’ your customer thinks,” says Loorbach. “The problem then is that at the end of the fiscal year, you just credit your doubtful debtors. That costs a lot of money and affects your revenue and cash flow.” The financial figures also become less clear, Loorbach indicates. “You don’t really know where you stand. If you have 7% doubtful debtors, your revenue is only 93% instead of 100%. That significantly changes the calculation of how your company is doing!”
Lots of Contact in the Community, Little About the Invoice
The main products of IMU are software sales and community and training membership. “Especially our community is a distinguishing factor. There we provide our members with feedback and guidance,” says Loorbach. “At the same time, there has been hardly any physical contact about invoices. This makes the chance of doubtful debtors much greater. That chance becomes smaller if your customer receives a payment reminder after non-payment, then another, and then a warning as long as payment is pending.”
Costs Quickly Recovered
With the 7% – 8% doubtful debtors per year, there were literally opportunities to capitalize on. “For structuring our debtor management, we considered factoring, selling invoices. A major disadvantage: you give up a significant percentage per invoice. Therefore, we didn’t find it profitable,” says Loorbach. On the recommendation of other entrepreneurs, IMU partnered with Payt. The debtor management now runs automatically through the software.
Loorbach: “With Payt’s software, we only need to collect 2 – 3 extra unpaid invoices each month to cover the costs. That’s quick results!”
The collection process has also been significantly revamped by the organization. “One of the challenging elements of setting up a debtor process yourself is in the collection process. At Payt, the collection phase is a standard part of the management process. This part of the process is also aimed at finding a joint solution with a debtor. If that doesn’t work, a bailiff is the next step. If you inform your debtor about this, you must have a partnership with such an agency. That is usually a complicated party!” says Loorbach.
