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Cash flow is a crucial element to the growth and stability of a business. It is important to ensure that you have access to such cash when you need it. Often, this cannot occur for some businesses because of existing debtors. Here are some tips to manage your debtors:

Details

Ensuring your invoices have the correct details is extremely important. By this, we mean that it contains the correct contact details for your customers. This can include:

  1. A contact name;
  2. The correct address for the customer;
  3. If works is being performed at a property or site, it doesn’t hurt to include this as well; and
  4. If your customer is a company or business, include the Australian Company Number (ACN) or Australian Business Number (ABN).

Sending

You want to be on the front foot with issuing your tax invoices. If you can send this to your customer on the same day you sell your product or provide your services, or at an absolute minimum within the same week. If your payment terms are 14 days, this could mean the difference between clients paying someone else’s invoice before yours.

Payment Options

Have a payment process that is easy for your clients to use. Take advantage of technology systems that are available to ensure an efficient way in which payment of your invoices can be attended to and finalised.

Disputes

If a customer disputes your invoice, ask them to specify if it is certain parts or the entire invoice. If it is parts of the invoice ask them to pay the non-disputed amounts, that way you are receiving some form of cash flow whilst you negotiate on the disputed aspects of the invoice.

Proactive

Be proactive about chasing your debtors and pick up the telephone. Do not be afraid to ask for payment and if a payment arrangement has been entered into make sure that you are monitoring it closely and contact your client immediately if the arrangement has not been kept.

Further Action

Be prepared to take further action for non-payment. This could be referring your customer onto senior management within your business or onto a solicitor who can assist with recovering the debt. The sooner you take such steps the easier it is to recover your money.

Review Terms

Ensure that a solicitor has reviewed your contracts so that they are legally compliant, as this will eliminate obstructions to the debt recovery process.

If you have any questions in relation to how to manage your debtors or reviewing your terms please contact one of our experienced team members at Southern Waters Legal on 9523 5535.

Debt disputes arise in both personal and business relationships and can cause a great deal of stress. Here are some simple steps you can take to recover your money:

1. Check the details

The first step is to review all the information you need to start the debt recovery process.

You should confirm who the invoice is made out to, and who issued the invoice. This will allow you to determine who you need to chase for the debt (the debtor) and who the money is actually owed to (the creditor).

You should then establish exactly what goods or services you provided to the debtor and how much the debtor owes you for these goods and services.

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