Debtor Days: How To Get Paid Faster
Did you know Debtor Days is one of the three major drivers of cash flow in your business? The other two are Creditors Days & Stock Days.
The secret to improving your debtor days, is simple: make it as EASY as possible for your customers to pay you. The easier the process, the faster cash flows into your business.
Here’s how you can make that happen:
1. Know Where You Stand
Regularly review your debtor days. What’s the current trend? Set clear targets for where you want to be in 12 months and track your progress monthly. Accurate, up-to-date bookkeeping is essential—you can’t manage what you don’t measure!
2. Raise Invoices Immediately
Use automated invoicing software and pre-prepared templates to issue invoices quickly. Where possible, use mobile invoicing apps or set up automated recurring invoices for regular services.
3. Run Credit Checks
Understand who you’re dealing with. Quick credit checks help identify potential late payers. If a customer’s credit isn’t strong, consider upfront payments or shorter terms.
4. Review Your Credit Terms
Don’t default to 30 days if 15—or payment on delivery—would work. Customers pay to your terms, so set them wisely. The shorter your terms, the better your cash flow.
5. Chase Invoices Early
If you’re not collecting payment by Direct Debit and rely on customers to pay manually, don’t wait until payments are overdue. Send friendly, automated reminders before the due date: two weeks out, one week, even the day before.
6. Use Multiple Communication Channels
Don’t just email—mix in phone calls, letters, and follow-ups. Equip your team with professional scripts to keep messaging consistent. This process can often be outsourced and pays for itself through improved collections.
7. Thank Your Customers
A simple “thank you” goes a long way. It builds stronger relationships and increases the chance that your invoice will be prioritised for payment.
8. Consider Subscriptions & Recurring Payments
Where possible, move customers to subscriptions, direct debits, or recurring payments. It’s predictable, hassle-free, and often means you’re paid in advance.
9. Take Deposits or Stage Payments
In industries like construction or software, it’s standard practice to take deposits and stage payments. Can you apply the same logic? It keeps cash coming in, even before a project is complete.
10. Debtor days are a critical KPI
Review them monthly. Discuss it with your team and always look for new ways to get paid faster. Keeping it front of mind to ensure it does not slip.
In Summary:
Make it as EASY as possible for customers to pay your invoices. USE TECHNOLOGY, choose your customers carefully, and look after them. Faster payments mean a healthier business—and fewer sleepless nights.
How do you keep your debtor days under control? We are always happy to help: If you need it, book a meeting or contact us.
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