Best Practice Debtor Management

Best Practice Debtor Management


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.
  • 27% of small businesses that don’t insist on upfront payments have been forced to take loans or use credit to pay suppliers and wages.
  • Veda’ssurvey of payment terms over 12 months revealed that smaller businesses paid invoices the fastest whereas businesses with more than 50 employees paid invoices at almost less than half the speed. Furthermore, Australia has the longest payment terms in the world — with payments averaging 26.4 days late followed by Mexico with 18.6 days.
  • 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 this best practice guide.

Review the Checklist

  • 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.

This Checklist is taken from The BIPlan System providing small business owners with the tools, knowledge and support they need to build more successful businesses and realise their business goals.

Meet the BIPlan System ®

  • In less than 60 minutes you'll get complete clarity on the current state of your business practices, uncovering any gaps that may be impacting your profitability, holding you back or putting your business at risk.
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The action items in the BIPlan System have been DIRECTLY LINKED to business profitability and are indicators of both scalability and saleability.

Based on system trials with 100 small business owners:

  • Everyone scoring less than 30% was losing money
  • Everyone scoring 50% or more was breaking even
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