Tips to Reduce your Debtors I have heard many arguments for or against the use of statements. Personally, I see no use for statements and in fact believe they can sometimes do more harm than good. I find it better to follow up individual invoices than statements. The old arguments for statements include:
I agree that statements can be seen as a good reconciliation tool from an accounting perspective. But how useful are they within the receivables process? Most times it just adds unnecessary days to the process.
As far as timing goes, it’s not just the debtor days that can suffer, you have the real chance of getting good payers offside. Clients can often receive statements not long after they have paid an invoice, which may cause confusion or upset the client. This situation is caused if the firm does not reconcile payments received prior to the printing and distribution of the statements. Regardless of reconciliation, the situation can still arise if payment is received during the postage delay. As an additional comment, I feel the use of statements is a waste of valuable administration time. Time that could be better utilised chasing payment. How to Stop Using Statements: If you are using statements, the easiest way to stop is to pick a date in the future and communicate to clients that from that date you will no longer issue statements. If clients are accustomed to paying on receipt of a statement, you need to ensure that you advise them that the change is coming. Give yourself plenty of time to advise your clients of the change. Don’t change over night, that won’t work. It will work if you communicate the new rules of the game correctly. Take this opportunity to also “refresh” clients on your trading terms and methods of payment. Don’t use statements, a tip you may want to consider. Cheers, Kev Ryan |
In this issue Singing Her Way to Success |
