Part 2: Keeping your eye on the ball
Getting your Terms and Conditions right and checking customers’ credit status are vital. (See Part 1 of this series). What else can you do to ensure prompt payment?
Monitor your Aged Debtors and set Customer Credit-Limits
You will probably already review your debtors at least monthly, to keep an eye on defaulters. Most financial software packages readily provide this data phased by sums due over successive months. Ignore it at your peril.
The monthly ‘Total Outstanding‘ figure per client is also critical. Your credit checks on each customer should also produce credit limits and you need to have really good reasons to allow these to be exceeded. (Banks, Factors and Debt-Insurers can be laughably conservative in guiding you here, but don’t ignore their advice without excellent reason.)