Debtor management is the management of your debtors. The people and companies that have to pay your invoices. The management of your debtors starts before you enter into an agreement with your customer and only ends when the payment has been received. The definition of debtor management is the following:
Accounts Receivable definition: ‘all activities that a company performs to ensure that customers pay their outstanding bills.’
What is good credit management?
Good administration is very important for a company. This can prevent customers from not paying their invoices or not paying them on time. Good debtor management therefore comes down to the following: ‘ensuring that customers pay your invoices as quickly as possible and in full.’
If your administration is not in order, this can in the worst case result in bankruptcy of your company. To prevent this, good debtor management is therefore essential. For example, with an agreed payment term of 14 days, you cannot check whether an invoice has actually been paid after a month.
The steps to be taken to ensure that an invoice is paid after all also fall under debtor management. It is best to stick to a fixed timing in this process.
In order to follow up your debtors as well as possible, you can maintain a fixed timing. At Debitan we use the following workflow as a basis. This is based on a payment term of 14 days. Of course you can adjust this entirely to your own liking.
- Payment reminder: 15 days after invoice date
- Telephone reminder: 21 days after invoice date
- Reminder: 30 days after invoice date
- Last call attempt: 44 days after the invoice date
Tips for good debtor management
- Keep track of your debtor administration
- Check your customers in advance
- Make clear agreements in advance about the payment term
- Invoice quickly
- Send a payment reminder immediately after the payment term has expired
- Contact the customer by phone and send a reminder if payment is not forthcoming
- Hand over the claim
Automate debtor management
Debitan offers various softwarepakketten with which you can automate the management of your debtors. This means that your debtors are automatically followed up after the invoice has been sent.
You can choose from different packages. You can also contact Debitan for additional modules with which we can tailor your debtor administration completely. You also have the choice to keep your administration under your own management or to outsource it entirely.
Outsource or do it yourself?
Whether you should outsource your debtor administration or do it yourself depends on several factors. It depends, among other things, on the amount of debtors you have.
In general, small businesses can do their credit management themselves. It is better for medium-sized and large companies to outsource it.