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Debtor management - The nuts and bolts

July 1st, 2021

Becky Zhang, CA, Tax & Compliance Manager

As a business owner, you should be familiar with your debtors’ ledger and the aged debtors’ reports. These are the nuts and bolts of good debtor management.

The importance in maintaining up to date records in the debtors’ ledger is obvious. You could lose a customer if an account manager refuses to fill an order, saying the account is over the limit when in fact payment has been received.

Regular monitoring of your debtors and effective debtor management strategies are nuts and bolts of your business practice. They flow through to overall cashflow and financial management. They complement your credit policies and flow through to your customer relationships. If you make your policies clear to your whole team and put systems in place so it’s easy for everyone to know what you expect from them, you’ll see the benefits.

Businesses that neglect these aspects expose themselves to risk at various levels:

  • inconsistent treatment of customers, leading to confusion and damaged relationships
  • inadequate cashflow, hampering normal operations and limiting growth
  • poorly understood and poorly implemented financial controls, which in a worst-case scenario make businesses vulnerable to fraud

Familiarity with the nuts and bolts of debtor management are fundamental to good financial control systems.

Download the guide to Debtor Management

Becky Zhang, CA, Tax & Compliance Manager

Lynch & Associates Limited

Email Becky Zhang

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