3 Great Tips for Chasing Debtors Painlessly

We are enthusiastic fans of cloud computing systems like Xero. It makes life much easier, reducing the cost and stress involved in running a business.

Maintaining good cashflow is absolutely critical to any business, especially if you have large, slow paying customers. Now you can automate many of the tasks involved in this part of your business.

Here are 3 great tips from Xero on how to chase your debtors painlessly.

1. Automate as much as you can

To save time, it’s key you automate your workflow as much as possible.

Set up automatic invoice reminders

Do you have trouble finding the time to email your customers about their overdue invoices? If so, set up invoice reminders in Xero — if you do this, Xero will automatically email reminders to your customers once their invoices become overdue. You can customize the emails’ tone and timing. Sure, it takes a small amount of time to set up, but you’ll save many hours in the long run.

How to set up invoice reminders

Email all your customer statements in one go

Statements are a great way to prompt your customers to pay you. Your customers can see their outstanding invoices and payment history at a glance. But don’t waste your time formatting and posting statements one-by-one. Instead, let Xero automatically create up-to-date statements for you and then email them all at once. With just a few clicks you can email up to 50 customer statements at a time. You control the format of your customer statements and the email wording that goes with them.

How to send customer statements

2. Prioritize your outstanding debtors

OK, so you’ve sent reminders and statements to your customers, but they still haven’t paid you. Now it’s time to start telephoning your customers. So who do you call first? Too often businesses chase debtors by starting with the customer at the top of their alphabetical list. They then run out of time to get through the whole list. If you don’t have time to chase all your customers now — then prioritize. Focus on either the biggest amounts or the oldest amounts.

Create a debtors smart list

Sitting in Xero’s Contacts screen is a handy little tool called Smart Lists — it has many uses including helping you target your most pressing debtors. For example, create a smart list that finds invoices that are over $500 and overdue by more than 30 days. Make this list your priority debtors.

How to use smart lists

Keep an eye on your Aged Receivables Detail report

Your Aged Receivables Detail report should be your go-to for checking the total amount of your outstanding debtors. Make sure to keep an eye on the noncurrent columns. The older your debtors, the harder it is to collect. Tip: always keep your bank rec up-to-date, your report is only useful if you’ve reconciled all your customer payments.

How to run the Aged Receivables Detail report

3. Record all conversations with your customers (and record them in one place)

When you’re calling your customers to chase payment, it’s important to make notes about the conversations. Too often, business owners forget what was said and this makes it difficult to start the conversation again if a customer still hasn’t paid you. If your customer tells you that payment is on the way, make a note of this — keep a conversation trail.

Enter notes against your customers’ records in Xero

In Xero, you can keep all your notes within the customers’ transaction records. This means notes are stored alongside your customers’ invoices and payment activity — everything’s in one place and you never lose anything.

How to use the contacts screen

Connect your email to your contacts list

Often customers will email you details of when and how they’ll pay you. In Xero, connect your email to your contacts list. Doing this means that your customers’ emails will automatically feed into your records in Xero. All your customers’ conversations and activity is stored in one place — this makes chasing debtors easier.

How to connect Gmail or Office 365 to your Xero contacts

Automate, prioritize and record. Follow these three strategies and chasing debtors will get a whole lot quicker and easier for you.