6 tips to improve debtor management

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Sanne de Vries July 9, 2024
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As an entrepreneur, it is important to pay close attention to debtor management. Invoices that are not paid on time can cause significant problems. Research shows that a large portion of invoices in the Netherlands are not paid on time or at all. To ensure that your customers do pay on time, there are several steps you can take. In this text, we share six tips for improving your debtor management.

Benefits of Debtor Management at a Glance

Optimizing debtor management offers various benefits for your company. Some important benefits are:

  • Process Optimization: Better efficiency through a structured approach.
  • Increased Liquidity: Faster payments that improve cash flow.
  • Customer Relationship Management (CRM): Good debtor management that promotes customer relationships.
  • Risk Assessment: Better insight into risky customers and outstanding invoices.
  • Reporting: Better control and overview through KPIs and data analysis.

Debtor Management Tips

A good debtor management process is essential for the survival of any business. By following the tips below, you can reduce the chance of late or non-payments and improve cash flow:

  • Document Agreements
  • Invoice Correctly
  • Maintain an Overview of Outstanding Invoices
  • Create a Plan and Follow It
  • Be Friendly but Clear
  • Engage a Collection Agency in Time

Tip 1: Document Agreements

Good debtor management starts with making clear agreements about the payment term. Document these agreements and communicate these payment terms through the general terms and conditions. Also, mention the payment terms on the invoice. By documenting these agreements, you prevent problems and can always refer back to the agreements made.

Tip 2: Invoice Correctly

To ensure that customers pay on time, it is also very important to invoice correctly. For example, invoice in the way your customer prefers. Does a customer want to see a signed timesheet or a purchase number? Does the customer prefer to receive the invoice digitally or physically by mail? By making it as easy as possible for customers, you increase the chance that an invoice will be paid sooner. Call a customer to check if the invoice was delivered correctly. This can save a few days.

Tip 3: Maintain an Overview of Outstanding Invoices

If you want to keep a grip on your debtor management, it is important to have an overview of outstanding invoices. You can do this with debtor management software. This allows you to intervene in time if an invoice is not paid on time. This prevents you from being too late in taking action. However, keep in mind that you should not bombard all customers with questions about invoice payment after just one day. It is important to be alert and take action if an invoice remains outstanding for too long. A debtor card can be a handy tool for this.

Tip 4: Create a Plan and Follow It

Good debtor management requires a plan and a structured approach. Create a plan for yourself in which you outline which actions should be taken when to collect outstanding invoices. For example, send a payment reminder after three days and contact the customer by phone after a week. Keep in mind that debtor management in the Netherlands is subject to certain rules. It is important to adhere to these rules.

Tip 5: Be Friendly but Clear

It is important to be clear about the agreements and the consequences of not meeting them. However, always remain friendly. For example, draft a friendly but clear reminder email indicating that the payment term has expired and ask if something might have gone wrong. Also, clearly state that you would like to receive the payment within a certain period. If necessary, you can always become stricter at a later stage, but often a friendly approach is enough to prompt the customer to pay.

Tip 6: Engage a Collection Agency in Time

If you have gone through all the above steps and a customer still does not pay, it is time to engage a collection agency. It is important not to wait too long with this, as it becomes increasingly difficult to get an invoice paid. A collection agency can help you collect outstanding invoices and prevent further delays. Keep in mind that engaging a collection agency incurs additional costs and that this can affect your relationship with your customer.

Improve Debtor Management with Payt

Do you want to take your debtor management to the next level? With Payt, you can improve your debtor management by using our smart debtor management software. This provides better insights into customer payment behavior and helps you identify payment arrears more quickly. Thanks to Payt, your debtor management process becomes structured and more efficient, ultimately leading to better liquidity.

Automate Debtor Management?

Do you want to automate debtor management? Payt offers numerous benefits, including process optimization, better control over Days Sales Outstanding (DSO), and consistent follow-up of outstanding invoices. By using automation, tasks such as sending reminder emails and tracking payments are fully automated.

Request a Demo at Payt

Do you want to discover how Payt can help you improve your debtor management? Request a demo now and find out how you can optimize your cash flow and collect payments faster with the use of technology, such as debtor software. Our experts are ready to guide you through the platform and answer your questions.

Frequently Asked Questions (FAQ)

What are the benefits of automating debtor management?

Automation ensures a more efficient process, saves time, and reduces errors. Tasks such as invoicing, reminder emails, and payment follow-ups are automated, resulting in faster payment processing.

How does Payt help improve my debtor management?

Payt offers a fully automated system for debtor management with real-time monitoring and reporting features. It helps you receive payments faster and provides integration with existing systems for a more efficient workflow.

When should I engage a collection agency?

You should engage a collection agency when a customer still does not pay after multiple reminders. It is important to do this in a timely manner to increase the chance of payment, but be aware of the additional costs and the impact on the customer relationship.

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By Sanne de Vries

Sanne is a business consultant at Payt. She helps companies optimise their financial flows with attention to detail and a deep understanding of business processes.

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