An important part of the financial administration ‘s accounts receivable. Debtors are customers for whom an invoice (bill) has been sent but have not yet paid. They therefore have a kind of short-term debt (loan) walk with you for this amount. Debtors are more important than many realize budding entrepreneur. About one in four insolvencies arise due to poor credit management. Read this article to findĀ how accounts receivable factoring works.

Bad Payers

Gonna assume that once you get a job within the deadline gets you nicely here within the payment to be paid? But then hold firm your heart. In the Netherlands, for many companies the custom to wait quietly pay a day or 40-60. They pay only after a third reminder. Without proper accounts receivable and timely reminders can it be that a large portion of income is delayed about 3-4 months. Money which have been a consideration to be delivered.

Standard Accounts Receivable

If one starts with business people do not want to push too much the customer. Pay no-cure-no-pay and invoice afterwards is standard. Then, sometimes wrongly assume that the bill be paid. The first bill is usually about three weeks open. The first memory is then after about a month. The second reminder wait many entrepreneurs it because it happens too intrusive. This might come only after a month or two. A large percentage of entrepreneurs has the nerve to wait for the third registered memory. Then they have to pay only after several months. If they receive an annual 4% return on equity and can defer a quarter years is a nice complimentary percent more power.

But It Is The Entrepreneur

Who may have to borrow to all have to fund the entire job. That may already two months on the job and has been working for two months before a bill can be sent. The difference in income is quickly six months!

Payment

in some cases there is little choice. If you have clients like Philips, Shell and the government then can you tackle so hard these customers; they have their own administration. Question here therefore clearly in advance what kind of payment they use so you know beforehand and how long will they debtor. Optionally, it can be arranged at a long term of payment in order to divide the bill into parts so as to large portions already to be received in the interim. But for smaller customers as individuals or SMEs, it is advisable to apply strict payment in order to keep the amount of receivables under control.

In the U.S it is common in many markets to use a payment within 14 days of the first bill. The first memory is usually free and has a period of 8 days. A second reminder has occasionally administration costs and a further payment of 8 days. Thereafter, it is common to turn on a debt collection agency. so that can already after 30 days after the first invoice.

Online Tracking Debtors

New entrepreneurs often lose the overview. Invoices are made neatly in Excel or Word, but then stopped in a folder and there is almost no longer neglect. As a result, they often have no idea what the exact situation is and therefore often take action on time. If you like this one, then it might be a solution to keep your online accounts receivable records with. A company like Money Bird allows you to keep track between outstanding and paid. And Exact lets you easily manage the online debtors where your invoices and reminders can also be sent via email or post.