If your business is like ours, debt collection is a big issue for you.
You know the saying revenue is vanity, profit is sanity. But cash is king!
Many a profitable company has gone bust, because it has run out of cash to pay wages and suppliers.
In our office solutions businessoffice solutions business, most of our business is transacted on 30 day credit terms. And it’s vitally important that we have visibility on how much money is owed to us, at any one time, on a daily basis.
To do this we use a simple tool to monitor our debt collection process. We call it a debtometer (picture attached).
The debtometer is updated on a daily basis and provides us with an exact snap shot of our outstanding monies on account (debt to you and me).
As well as clearly showing your whole team how much total money you are owed, it breaks it down into sections of days overdue. We use this to identify the days of debt that we need to work on the most, this could be 60 – 90 days, over 90 days or 30 – 60 days.
In our business we also have a target, to keep the average days of debt under 45 days. As you can see, our debtometer is also used to measure this.
The debtometer is our high level debt collection dashboard view, which is underpinned by a structured collection process.
It works for us, and maybe it could work for you too?
