Business Tips, Interesting Fact & Ideas

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Why are your debtors not paying, as they should? Perhaps your conditions of sale weren't explained well enough to them in the first place, we've all been guilty of that one.

Perhaps there is something wrong with what you have supplied, something not complete? Check the accuracy of your invoices, a very common issue.

Perhaps they are the types to squeeze as much time out of you as possible. They'll find every reason for not paying and every excuse for why it hasn't been done if there is no reason for the non-payment. They promise to look into it straight away … yeah … yeah.

Whatever the reason, it's got to be fixed. It's costing you money.

Example: (Very simplistic)

• Average 'Accounts Receivable' each month of $100,000
• Average Collection Period of 6 weeks
• Interest Rate of 12% (1% per month) 

If the average Collection Period was reduced by 2 weeks:

• If financed by debt - 2 weeks interest on $100K saved every month (approx. $500/month).
• If financed by cash/savings - 2 weeks interest on $100K earned every month ($500/month).

NOTE: $500/month is enough to replace the photocopier and fax machine (rental basis) that have been causing so much office stress, breaking down at least once a fortnight. It's even enough to lease a small new car, replacing that old service vehicle that has been so expensive to maintain.