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Credit Management Training Guide
When a business fails, it’s almost always due to cash flow problems that arise from late-paying customers, or debtors, and unpaid invoices. But as the number of small businesses in Australia have increased in the last five years, so too have the number of closures resulting from inefficient cash flow.
Last year, in its annual corporate insolvency report, the Australian Securities and Investment Commission (ASIC) reported that inadequate cash flow had now become the leading cause of corporate insolvency during the 2014-15 financial year.
Not every business suffering cash flow problems goes insolvent right away. Many more, especially those operated by sole traders, struggle on with clients and customers who don’t pay on time or, worse, not at all. Indeed, a study last year commissioned by PayPal and QuickBooks Intuit, found that Australian small businesses are owed a collective $26 million in unpaid invoices. That’s roughly $13,200 owed to each business at any given time, for which business owners will spend an average of 12 days chasing each year.
Perhaps 12 days out of 365 doesn’t seem like much time spent chasing invoices, but look at it this way: The ACCC estimates that nearly three-quarters of all business invoices are paid late, while recent figures released in Dun & Bradstreet’s quarterly Trade Payments Analysis report found that businesses wait an average of 44.9 days for payment, with businesses in the ACT, NSW and WA waiting the longest: between 46 and 50.4 days.
Credit and Debt Management: From New Clients to Regular Clients
It doesn’t matter which way you paint it. Credit and debt management is one of the most overlooked aspects of operating a small business and it’s affecting the business owners who can least afford it. Figures released by the Australian Bureau of Statistics (ABS) found that closure rates for businesses were higher among those with an annual turnover of under $50,000 than those with an annual turnover of more than $2 million.
For a small business to thrive and prosper, it must implement efficient measures to manage its debtors. Our complete guide to Credit and Debt Management Processes and Systems for Small Business will show you how to do just that, regardless of the size or type of business you operate. Our Credit and Debt Management Training Guide helps you understand how good credit and debt management principles can be applied at every stage of dealing with new clients from credit assessment, quoting and deposits, monthly management and enforcement.
NOTE: This guide is available for members of the Director’s Club.