The convenience of debtor management software

When debtors delay payments or fail to pay, does this cause you stress? You are not alone. Many companies have to deal with this
Photo of a man working on his laptop with the software of Payt

What is debtor management?

Debtor management, also known as debtor administration, is all the activities a company performs with regard to its debtors. Good debtor management is important and prevents customers from not paying their invoices at all or paying them far too late. It is an effective way of increasing your company’s working capital. The process of debtor management is successful if the accounts receivable ratio is as low as possible, i.e. if invoices are paid in full and on time. Unfortunately, this does not happen by itself. In order to properly execute the accounts receivable process, a fixed workflow works best. With a payment term of 14 days this can look like this:

  • Sending invoice: invoice date or immediately
  • First reminder: 2 days after due date
  • Second reminder: 18 days after due date
  • Final reminder: 34 days after due date
  • Start of collection procedure 50 days after due date

By automating this process, you structurally remind your customer of outstanding invoices. This improves the payment behaviour considerably.

Photo of two people sitting opposite of each other and talking about the software of Payt that can be seen on a laptop

Why is it important?

The primary goal of a company is to achieve maximum profit. Products are purchased competitively and sold with maximum profit. This cannot be achieved if customers do not pay their invoices or do not pay them on time.

Poor liquidity can jeopardise a company’s survival. A large part of the bankruptcies are caused by poor debtor management. This then makes good debtor management a very important part of an organisation.

At Payt we believe that in percentage terms, deliberate defaulters are minimal. Good debtor management therefore consists of finding out the reason for the non-payment.

Has the product or service not been delivered? Does the customer have a complaint? Or is there an error on the invoice?

Communication with your customer is very important to achieve this. Good debtor management improves the payment behavior of your debtors and improves customer relationships. This will result in a shortening of the payment term and a reduction in the amortisation of unpaid invoices. Ultimately, this makes a direct contribution to the profit of your company!

Automating debtor management

Many companies work with different programs, such as accounting systems and CRM systems. These systems are effective for keeping track of customer data, contracts and information about appointments. To take even more work off your hands, Payt credit management software links with these programs. This gives you more time for other important matters within your company.

Payt software makes it possible to send invoices and payment reminders fully automatically, from your first invoice to the last reminder. Payt structurally reminds your debtors of the outstanding invoices. This ensures consistency in the process, better payment behavior of your customers, and a lower Days Sales Outstanding (DSO).

Screenshot of the Payt software where you can see an overview of all invoices and debtors

Outsourcing debtor management: what should you pay attention to?

Outsourcing debtor management often means outsourcing the entire process. For most parts of it, that is also quite sensible. Professionals can often do it better and faster. But there is one part of debtor management that is difficult to outsource. And that is the substantive disputes or questions from your customers. It will be difficult for you to outsource these properly and there is a considerable risk in this. You can lose your customers faster because of this. Customers do not appreciate having to explain to a third party that your product was not delivered as agreed or that there was a mistake on your invoice. Outsourcing debtor management offers many advantages and some disadvantages. We will briefly discuss these.

Advantages of outsourcing debtor management

  • Specialist knowledge. Professionals are often better able to do the job because they are trained for it. You can therefore be confident that your accounts receivable management will be handled properly.
  • Time-saving. By outsourcing your debtor management, you can spend your valuable time on business or other important matters within your company. This allows you to do your work more effectively and efficiently.
  • Saving money. When you hire someone to do your credit management for you, you always have to deal with fixed staff costs. This is not the case when you outsource.
  • Cash flow boost. By automating where possible and giving personal attention where necessary, the payment behaviour of your customers improves significantly. By consistently bringing outstanding invoices to your customers' attention and offering multiple payment methods, your customers can pay their invoices quickly and easily. As a result, you will be paid much faster.

Disadvantages of outsourcing debtor management

  • Less influence on the personal approach. By outsourcing accounts receivable management to a third party, you have much less or even no influence on the way they deal with your customers. When your customer has a question or remark about the invoice or your product, the third party will handle it. This is not something your customer will appreciate. You want to have control over this, don’t you?

With Payt debtor management software, you do not have to worry about this. We automate where possible and provide a personal approach where necessary, with you in full control of the process. The software automatically ensures that your customers are reminded of outstanding invoices in a structural manner. This saves you a lot of time. Does your customer have a question? Then he or she can ask it very easily, at invoice level, in the online environment. As a result, you are always in control and can offer your customers the desired solutions.

Advantages of Payt

Using debtor management software has many advantages:

  1. You will regain control of your debtor management. In the Payt platform you can immediately see what the outstanding balance is, in which phase of the billing process a customer is and which invoices require action.
  2. Your debtors are structurally reminded of outstanding invoices. Consistency in this is very important for good payment behaviour of your debtors. Payt structures the communication with your debtors. Every debtor has the option to leave a message in the Payt communication portal. This enables you to find out why a customer does not pay his or her outstanding invoice and respond appropriately. This promotes the payment behaviour of the customer and customer satisfaction.
  3. Payt makes payment easier for customers. The software makes it possible to add PayPal and direct debit to every invoice and payment reminder. This lowers the outstanding balance in almost every industry.
  4. By using Payt’s software, you save an average of 50% of the time required for debtor management.

Curious what Payt can do for your organisation? We are happy to tell you in a personal consultation.