Debtors

There isn't a financial director around who wouldn't like to accelerate cash flow by reducing debtor days- in other words, get customers to pay up faster. In Europe's top 1,000 quoted companies, nearly one-quarter of all invoices are unpaid at any point in time, according to recent research carried out by the ASF organization. This means they are sitting on a total of 274 billion overdue debt. Most of this is caused by poor collection practices. According to Jan Porter, ASF's Managing Director, 'You can set up all the systems you want, you can insist on watertight contracts and payment terms, the government can even introduce late payment legislation, but there are always some debtors who fail to pay on time. Once payment is overdue, your first step is to talk to your debtor. You should let them know the payment is late and try to find out if there is a dispute about the work, or if your debtor has financial problems. This is OK, but Tim Vainio, a chartered accountant, believes that too many companies are afraid of losing a relationship, and that, before undertaking any action, the focus should be on recovering as much money as possible, rather than on preserving a relationship.'