"The majority firms have a Credit Control Department. Even the majority One-Man operations have a policy and system of some sort. The upset for many firms begins when the debtor just doesn't pay."

Specially in a Credit Crunch You really need a Debt Collection Process that

All small businesses need a process for chasing slow payers. If you are a small busineness and you don't like chasing slow players or just don't have time then consider your options carefully.

"Who is in control of your organization? Whoever controls the cash inflow, cash outflow, or holds your grants or accounts receivable. Get control of it NOW. Make sure YOU are in control of expenditures and that a good system of checks and balances are in place. Key an eye on the register; nervous people do stupid things. Who owes you money? Time to make some "Bitch where's my money" phone calls!"

Buckle Up, It's Going To Be A Bumpy Ride « Wild Sheep Chasing

An entertaining viewpoint

Surviving In Tough Times: Getting More From Your Sales - Ecademy

Some real life pointers. Do you run your business this way? and can you improve your processes?

 

"Managing cash flow and mitigating risk

In challenging economic times like we have at present, businesses are always looking for the edge over their competitors. However the reason for many business failures can often be found much closer to home.

Current estimates indicate that approximately 90 per cent of business failures are the result of poor cash flow and debt management practices. However many businesses remain unaware of how to prevent them."

"The trouble for many companies happens when the debtor just doesn't pay. The Accounts People send out statements and reminders, until, at a certain point they send out a final demand, before finally handing the responsibility for the debt over to a specialist debt recovery firm. At this point the commercial relationship with the debtor is well and truly broken beyond repair, and you, the Creditor have lost control of how the debt will be recovered."

Specially in a Credit Crunch You really need a Debt Recovery Process that's Seamlessly Integrated into Your Accounts Systems | Funny Stuff is all around

You need a specialised process in place to handle this situation

"DEBTOR management systems: Many small to medium-sized businesses simply don't have a system for managing debtors

Tips for small businesses to survive the financial crisis - Local News - Geelong, VIC, Australia

These are all good tips for SMEs but how does a small business with limited resources go about putting better debtor controls in place?

Some options are:

• load up an aleady overworked staff member
• spend a weekend ringing around all the debtors
• get a new accounting package - or actually learn/use the  features of the current package.

However, these are all short-term measures and they soon run out of steam. As well, some expertise needs to be put into the process to get the best results. If the book-keeper has some expertise in this are then they are a possible solution. Most book-keepers however just don't like chasing people up asking for money.

A more practical solution is outsourcing the process to experts. These people already have the processes and methodologies in place so that client relationships are maintained. The invoices are paid directly to the client and the outsourcer gets paid a small fixed retainer fee.

This is different to factors and debt collectors who collect the invoice directly and charge a percentage fee of invoices collected. Factors are a risk in that as a third party they can damage client relationships and if debt collectors are required it is probably too lateto recover the money anyway.