"We often find many companies don't have a formal collection strategy in place, therefore chasing payment is often more of a 'knee jerk' reaction to a dip in cash flow, or, invoices are left for several months before any contact is made regarding payment.

 

Smaller businesses are not 'customer focused' in collecting their payments in these circumstances and may loose repeat business as well as not getting paid."

 

"A growing number of small businesses are taking longer and longer to pay their debt, and according to QLD based small business financial advisor, Sue Winstanley, the bigger they are, the worse it's going to be for small business. Ms Winstanley works with many small businesses across the country improve their cash flow and has seen first hand the impact the financial crisis has had on these businesses. Downturns, or rising interest rates, can lead to payment delays of almost three months.Very few businesses realise they have a 2 percent bad debt risk the moment they give credit - and it gets worse. At 60 days, it is 15 percent, at 120 days it increases to almost 50 percent.She advises small businesses to implement effective debtor management strategies to avoid being weighed down by debt. These include: training debtors to pay on time, assessing risk with credit checks before giving credit to new customers, build payment reminder dates into the system, and to look at outsourcing, as it can often be cheaper and more effective."

Sue Winstanley is Director of Accounts Receivable Solutions (SE Qld), is based on the Sunshine Coast and services clients throughout Australia. Her web address is:

www.ozwald.com.au

and can be emailed at

ar@ozwald.com.au

 

"A collections policy, Groves said, should include regular invoices - preferably monthly - to anyone with an outstanding balance, as well as a policy of following up by phone and in writing with customers whose bills are at least 30 days overdue."