What is debtor management?

Debtors and creditors

In business, you are dealing with debtors and creditors. A debtor is a person or a company that still has to pay for products or services supplied. Once paid by these customers, they are no longer called debtors.

A creditor is a person or a company that has provided goods or services to a company or person and expects to be paid at a later date. The party to whom the credit has been granted is the debtor.

What is debtor management?

To ensure that your debtors pay their unpaid invoices on time, you need a debtor management. This consists of all activities that a company carries out with regard to its debtors. You can think of sending invoices and reminders, calling customers and opening a debt collection case.

Good debtor management is important to prevent customers from not paying their outstanding invoices or paying them too late. In addition, it is important to find out the reasons why debtors do not pay their outstanding invoices.

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

To find out the reason why a debtor is not paying their outstanding invoice enables you to respond adequately. This improves the payment behaviour of your debtors and with that the customer relationship.

How do I ensure efficient and effective debtor management?

You can easily achieve efficient and effective debtor management by using debtor management software. You can link this software to systems that you may already be working with. Think of accounting systems and CRM systems.

The software makes it possible to send invoices and reminders fully automatically without losing control. In addition, it is possible to communicate with your debtors per invoice in the software. This enables you to find out why the debtor does not pay the outstanding invoice.

Illustration of a person responding to a customer who has a question about an invoice

This consistency and communication is extremely important for the satisfaction and payment behaviour of your debtors. In this way they know exactly where they stand. This will result in a shortening of the payment term and a reduction in the amortisation of unpaid invoices.

Do you like to know more about the convenience, possibilities and advantages of debtor management software? You can discover that here.

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