Manage Your Creditor Ledger

22/07/2019
Manage Your Creditor Ledger

Credit control is the last thing that many businesses worry about. The priority for a young or established businesses is on customer acquisition and increasing sales and not having the right back office processes in place to manage your sales and Cashflow with proactive credit control and dispute resolution.

The sales team do not like a credit controller (the doom and gloom department) calling them and asking to ascertain why a invoice is outstanding an and being flagged against their customer as an invoice in dispute or other reason.

However, as time goes on, the terms and conditions hastily drawn up in the early stages may not be working for you. Furthermore, as the business grows you may notice your cash flow systems aren’t as robust and time efficient as they should be. Ensure you can ask for late payment or interest chargers after the due date.

Managing your creditor ledger is never the most exciting aspect of your business. However, by getting a system in place to manage your cash flow, you enable your business to continue growing. With healthy cash flow, your business can continue reinvesting and plan for the future. So, how can you better manage your creditor ledger to enable further success for your business?

  1. Regularly monitor customers

While many businesses conduct a credit check on new customers, most will not check up on existing clients. However, circumstances can quickly change, and your trusted existing clients may actually pose a risk to your business. Conducting regular monitoring for all of your clients is wise. You can then grade clients accordingly, depending if any could potentially pose as a risk to your business. Then you know which need a closer eye on.

  1. Review your credit policy

It is essential that your staff and your clients are fully aware of your credit policy. Furthermore, it should be in line with your risk policy. Make sure your credit policy is easily understood and accessible to your staff and clients. Remember to include the essentials such as;

  • Prepayments
  • Deposits and down payments
  • Discounts for early settlements
  • Terms and deadlines.
  1. Create a robust accounts receivable process

It helps to map your receivable process so that all staff follow the same course of action and there is no discrepancies or variations for different clients. Your process should include the method of record keeping too. So that, in the event of any disputes, it is easy to find the information and ensure that everything is in line with your policy so that further disputes cannot be raised.

  1. Choose cloud-based software

As well as the benefit of being able to manage your creditor ledger at any time, in any place, a cloud-based system can help to ensure good data management. Cloud-based software makes sure that all of your data and records are backed up. Having all of your information in an organised, well-maintained state makes it easier to check and determine appropriate credit limits and credit extensions.

  1. Prioritise the largest debts

In the event of a tricky cash flow situation, it is important to mitigate the risk as much as possible. Focusing your efforts on the larger debts can help you to bridge short-term cash flow gaps. Furthermore, these are less time consuming than chasing lots of small overdue debts. Focus on the most substantial debts first and then move to smaller debts when there is time.

If your business is still struggling to manage cash flow while you are waiting for debts to be repaid, Global Asset Finance Limited has a range of financing options allowing you to continue operating and to bridge the gap between paying suppliers and receiving payment from clients.

We are also, credit control experts in managing and improving credit control processes to reduce your debtor days “DSO” and have provided this service to a number of high profile companies.

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Categories: Invoice Finance Services