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Debts & Accounts receivable – How SMEs can manage effectively

Close-up picture of an invoice with red paid stamp with selective focus. Great use for financial concepts.

Debt doesn’t have to slow your business up if you don’t let it. Collecting payments can be labourious, dull and time consuming, not to mention stressful. If you are waiting, sometimes for months, for even a small payment it can niggle at you and distract you from focusing on the more important aspects for running your business. So why not get automated and follow an easy process that will take the hard work out of a crucial part of your business. EzyCollect is designed to do just that. So why not take a free trial and make your business life Ezy-er?

 

Debt can sink your business

“SMEs must end delayed payments due to its affect on the economy,” said one Minister in Malaysia recently. A survey by the SME Media Group and Inti International University showed late payment was a very common problem, with 73% of business operators saying it was a Malaysian business culture and noting that it is a stumbling block for many SMEs, with some waiting up to 94 days to get paid.

Findings from the latest RAMCI Industry Debts Turned Cash (RAMCI i-DTC) indicators show the majority of companies granted a total of 30 days credit terms to their customers. The Minister also urged businesses to make full use of digital financing to compete with the other SMEs globally. Meanwhile in China strains faced by SMEs are expected to grow more visible as Beijing deflates the real estate bubble and eases infrastructure spending.

“Many SMEs probably won’t make it this year,” said Wang Cong, manager of a struggling mid-sized logistics company in the eastern city of Zibo. Some 1.21 million SMEs went out of business during the first quarter of the year, a jump of almost a third compared to a year earlier, data from the State Administration for Industry & Commerce (SAIC) showed. “The market is going through a quicker process of survival of the fittest,” Yu Fachang, a SAIC official said.

Over the past few months data coming out from the Thailand government and the private sector are showing signs that could be worrisome in the medium to longer term for the country. According to the Bank of Thailand, bad loans in the SME sector rose to as high as 4.48% of outstanding loans as of the end of March from 4.35% seen during the fourth quarter of 2016, Jaturong Jantarangs, the Bank of Thailand’s assistant governor for the monetary policy group, said soured SME loans showed no signs of declining as a lack of competitive edge and uneven economic recovery hindered businesses’ debt-servicing ability. “But when it tends to be more about the structural issue, which is Thai SMEs’ lack of competitiveness,” he said, adding “the uneven economic recovery and structural problems faced by some business sectors undermined the debt-servicing ability of both households and businesses, particularly SMEs.”

 

Just imagine easy payment collection

Think of all the time and effort that you currently use to collection overdue payments, then halve it. Can you imagine if your business had an automatic collection system for overdue invoices integrated in to your current accounting system? This system sends personalised reminders to your clients to gently nudge them to honour your invoice. Maybe your client is busier than you, or just forgot, or is having a personal crisis or just a bad week. If your personalised email gets no response then go ahead and automate your reminders in a variety of ways; phone, email and sms. Email can be erratic, or even typos might just cause a mix-up in your system so you should attempt to cover all bases. Link these to automated statements that allow you to keep track of payments, then schedule personal calls in a dynamic way to get the results you need, with diplomacy. Cover your back with on-demand credit checks and if you need to get tough then make use of a single-click demand letter reminding your client that your invoice is overdue. The last resort is debt collection and this can also be integrated in to your current accounting system with EzyCollect software.

 

Boost your cash flow

Cash flow is the life blood of your and every business. Without cash flow you will go bankrupt, no matter how good your products and services are or how hard you work. So why not work smarter with ‘Track the cash’. This provides instant mapping and tracking of all money owing and overdue in your business. You can track all debt collection activities in one place, significantly boost cash flow and get paid faster, prevent bad debts and enjoy more cash to buffer your business, service loans and even reward your staff better. Can’t be bothered with facing up to clients who still owe you? Just automate your follow up in gentle progression from initial email to final debt collection action. Each follow up should take you further towards payment without you having to constantly remember, take action or worry about it. It will also allow you to reach more customers in less time with a system that saves hours of staff time each week and reaches every overdue customer with persistent, polite reminders. No mistakes with this system if you automate with care. You can customise the proven reminder templates in EzyCollect enabling you to automatically thank customers when a payment is received. It also allows you to improve employee efficiency by add multiple users so your staff, accountant or credit controller can share tasks, reports and deep insights.

 

Business processes are valuable because they provide you with a systematic, user friendly way to improve your business, at a low cost. If your SME is highly geared then bad debts may cause you to lose sleep and expend too much energy on one aspect of your business. So why not make payment collections ‘Ezy’ and make a simple addition to your current accounting software with EzyCollect.

 

 

 

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