Best Practice Debtor Management
Is your business losing money through unpaid debts? Review your business practices against best practice business benchmarks to identify gaps that may be costing you monek or putting your business at risk.
Is your business losing money through unpaid debts?
If so you are not alone: Australian small businesses are currently owed over $26 billion because of unpaid invoices .
- Bad debts account for over 60% of this outstanding amount.
- Late payments have deteriorated almost 21% year-on-year (Sept 2020), despite a wave of government stimulus efforts. Only a fortunate few Australian businesses have escaped unscathed, with companies across all sizes, regions and industry sectors reporting sharp increases in late payment times.
- Small business owners report they spend an average 12 days per year chasing unpaid invoices.
- 60% of businesses that close down are profitable but they simply run out of cash because of poor cash flow management.
So what can you do to maintain a positive cashflow and avoid becoming one of the statistics?
Review your debtor management practices against business best practice benchmarks to find out.
Review the best practice business benchmarks
- We always ensure that we have the appropriate customer approval for service performed and/or product bought.
- We ensure we have full knowledge about any individual or company we are giving credit to, so we minimise our risk.
- We invoice early and often and keep our terms as short as possible.
- We have clear terms and conditions on our sales contracts including expectations for customer payment and consequences for late or non-payment.
- We have a clear process to follow up outstanding or disputed debts.
- We encourage sales on the day and offer various payment options to assist this process.
- We utilise cloud based debtor management systems to assist with debt collection.
What are Best Practice Benchmarks?
Also known as generic or process benchmarks.
As the names suggests Best Practice Benchmarking involves identification of best practices across generic functions, processes or operations, identifying the most effective operating practices from other businesses that perform similar functions.
Best Practice Benchmarking is effective across the full range of generic business operations: branding, marketing, sales, operations, financial management, technology, human resources, risk mitigation and strategic planning.
The Better Business for Good Company BIPlan System® is an example of Best Practice Benchmarking. Developed by a team of small business specialists the BIPlan System enables every small business to benchmark their business against over 200 individual benchmarks covering areas as diverse as brand identity, financial management, management of people and risk, customer relationships and environmental impact. Each item is important in their own right, some take longer to implement than others, but taken as a whole they help a business to become more profitable as well as a good corporate citizen.
Other types of business benchmarking include performance, functional, operational, industry and competitive. Learn more about how the different forms of benchmarking can help your business.
Want to make your business more profitable, scalable and saleable?
Measure, manage and improve your business against more best practice checklists like this.
Developed by small business specialists, the BIPlan System is the most credible tool a small business can use to measure, manage and improve their business practices against best practice standards.
- Assess how your business performs against dozens of best practice checklists. Taking the Assessment alone will be a valuable, eye-opening experience.
- Compare your answers to best practice standards developed, tested and proven by Australian small business specialists
- Create and implement a customized improvement plan for your business with our best practice guides and the support of our business advisors and specialists to help you implement