What is debtormanagement? Everything you need to know
Control over your cash flow starts with the basics
You have closed a deal and sent the invoice. For many organisations, this feels like the end of the process, but in Finance, we know better. This is where it truly begins. After all, an invoice is not yet money in the bank.
What exactly is debtor management? At its core, debtor management (or accounts receivable management) is the complete process of monitoring, following up on, and collecting outstanding invoices. It encompasses everything from the moment the invoice is sent until the funds are in your account. Effective debtor management is not just about 'collecting money'; it is about finding the balance between financial returns and customer retention.
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They already use Onguard debtor management
Why is effective debtor management crucial?
Cash flow is the lifeblood of any business. Without cash, everything comes to a standstill. Professional debtor management directly ensures:
The indispensable role of the debtor management officer
In the past, the debtor management officer was seen as the 'strict accountant'. That image is outdated. Today, you are a diplomat and an analyst rolled into one. You monitor payment terms, but also act as an extension of customer service.
A modern debtor management officer:
- Proactively monitors outstanding items.
- Analyses payment behaviour to identify risks.
- Communicates with empathy across various channels.
- Collaborates internally with sales to resolve issues.
At Onguard, we believe your strength lies in human contact. Repetitive tasks should be automated, giving you the time to focus on complex cases.
Automated debtor management: How does it work?
In a data-driven world, Excel is no longer a viable option. Automated debtor management means software takes over repetitive tasks.
Imagine this: the software 'spots' that an invoice is due. On day 1, the system automatically sends a friendly reminder. If the customer does not respond, a second message follows a week later. Only if that remains unsuccessful do you receive a task: "Call this customer". This ensures you are always consistent and on time.
Watch the video to see how Onguard works
The risks of a faltering process
Never underestimate the risks of lax debtor management. What are the specific risks involved with debtors? The greatest danger, of course, is non-payment, which directly impacts your profit. To break even after writing off a £10,000 invoice, you would need £100,000 in new turnover at a 10% margin. That is a harsh reality.
In addition, there is liquidity risk. If your customers take an average of 60 days to pay, while you must pay your suppliers within 30 days, a financial gap is created. This gap has to be financed, which incurs interest costs and makes you dependent on the bank. Reputational damage is another risk; if you only call about a forgotten invoice after three months, you appear disorganised. As a result, customers may take your payment terms less seriously.
How debtor management software helped our customers
How do I choose debtor management software?
The market is broad; alongside Onguard, there are players such as Billtrust, CreditDevice, TKB or Payt. How do I choose debtor management software that suits my company? Pay attention to the following points, which we at Onguard consider essential for larger organisations:
Integration capabilities
Scalability
Functionality
Ease of use
Experience and support
Is outsourcing debtor management a smart move?
A frequently asked question: is outsourcing debtor management a smart move? The answer depends on your strategy. Outsourcing (factoring or full business process outsourcing) can provide immediate liquidity and reduce staffing concerns. However, you also hand over control of your customer contact. The party calling on your behalf may not have the same feel for the relationship you have built over many years.
We often see that companies prefer to maintain control themselves (in-house), supported by smart software. With tools like Onguard, you retain insight and the personal touch while automating the heavy lifting. This allows you to combine the best of both worlds: efficiency and customer retention.
Tips for better debtor management
Whether you use software or not, the basics must be right. What are the best debtor management tips that you can apply immediately?
- Clear agreements upfront: Ensure that payment terms are included in your contracts and general terms and conditions, and that they have been clearly discussed..
- Invoice immediately and accurately: Do not wait until the end of the week. An invoice containing errors is the perfect excuse for a customer not to pay.
- Keep communicating: Call major customers a few days after sending an invoice: "Has the invoice been received correctly, and is everything in order for payment?" This prevents surprises on the due date.
- Make payment easy: Add a payment link or work with direct debits.
- Segment your audience:Do not treat every customer the same way. A multinational with a complex procurement department requires a different approach than an SME. Our software helps you segment customers and link them to the appropriate workflow.
Frequently asked questions about debtor management
Do you have any further questions about the process or our software solutions? Our colleagues are always happy to help with an initial introductory meeting. If you would like to explore further, the frequently asked questions below may help you.
From administrative burden to strategic advantage
Debtor management is not an island; it is an integral part of your success. At Onguard, we do not just provide the software – we also share our expertise. Are you ready to optimise your cash flow and free up more time for what truly matters?