With smart debtor management, you can improve cash flow. But when is your debtor management effective and how do you measure it? Payt provides you with 3 financial KPIs to measure the impact of effective debtor management on your organisation and cash flow.
1. The average achieved payment term
In how many days do you get an invoice paid on average? The lower the number of days, the lower your days sales outstanding (DSO). A low DSO has a positive impact on cash flow. Moreover, it ensures that you have sufficient financial resources to use for growth and/or innovation.
I don’t score well on this KPI, what can I do?
Encourage your customers to pay invoices earlier. Consistent debtor management has the most impact. Think of follow-ups with reminders, a business call, and a final reminder. This increases the chance of faster payment. If you use automation, you don’t have to spend extra time on it.
2. The average number of days paid late
How many days are you paid late on average? By how many days is your payment term exceeded? This is the basis of the payment morale among your customers. The lower the number of days of exceeding, the faster you receive payments.
I don’t score well on this KPI, what can I do?
Encourage your customers to pay on time. For example, use clear language in the invoices and ensure they are clear. A different payment term ensures that an invoice is paid faster.
3. The number of invoices written off as ‘unpaid’
How many invoices do you write off per year as ‘unpaid’? If the payment from a debtor is still outstanding even after a long period (for example, six months or a year), this is often the last option. The fewer invoices you write off, the better your debtor management is. And the more of the revenue you actually collect.
I don’t score well on this KPI, what can I do?
Set up an effective debtor management system, focusing on consistently coming to the attention of debtors. If you use the smart software from Payt, with automation of the follow-up process, you won’t have to spend extra time on it. With Payt’s software, you have all the tools at your disposal to limit the impact of written-off invoices on cash flow.
