If you have too many outstanding invoices your working capital could be severely reduced, limiting your ability to take on additional work and take your business to the next level. It is wise, therefore, to have a sales ledger management strategy in place to keep things running smoothly. Efficient and proactive management of your ledger will not only help to improve your cash flow, but also minimise the risk of accumulating bad debt and ultimately lead to being paid quicker.
Managing your debtor book could take the form of knowing your customers by conducting credit checks before supplying products or services, identifying which debts are uncollectable and pursuing those where funds could be realised, utilising the best accounts receivable systems and processes to reduce any potential queries or disputes against invoices raised, or accessing a form of debtor finance such as invoice factoring. Thoroughly understanding the details of your debtor book can help you spot the early signs that a debt may be about to turn bad, giving you the opportunity to press for payment before it reaches this stage.
BTG Advisory’s dedicated team of specialists can advise you of the best solution for your circumstances.