January 31, 2005

Are your INVOICES inviting BAD DEBTS?

In tight economic times, the bad debts rate goes on the increase. Clearly, it is a time to be extra vigilant about getting money in quickly. Statistics show that the longer a debt is outstanding, the LESS likelihood you have of even getting it.

Take a look at your INVOICE format. Is it working AGAINST collecting debts? What I'm getting at is this... look at the "Due" and "Overdue" boxes. Do they have "30 DAYS" "60 DAYS" "90 DAYS" "Over 90" actually printed on invoices. Maybe this practice is a hangover from when cash flow wasn't such an issue. But in today's climate, it is surely advertising the fact that the company expects the debtor to hold out payment.

Also, companies are often reluctant to ask for ealy payment for fear the debtor will shop elsewhere. If this is the case, you are perhaps better off leaving them to the opposition!

A simple "This amount is due NOW. Your prompt payment is sincerely appreciated", followed up with very friendly payments outstanding letters can put a whole new complexion on cash flow. It won't move the hard core slow payers, but who needs them?

Posted by DK at 09:00 AM