When debt is managed well, you can increase the speed and volume of cash coming into your business. In the longer-term you can increase sales and profitability by extending your customers’ credit limits.
To manage the risk to your business, maintaining an accurate view of your overdue payments with a clear aged debtor (or aged receivables) report is an important part of your management process, so you’ll be pleased to know that Cloudfy can help.
Why aged debt is important
When your B2B ecommerce site is delivering sales from your registered customers, you might be confident that your cashflow is good. However, if your customers are slow to pay or even fail to pay at all, the financial health of your business could be at risk.
Good practice for debtor tracking
Your aged debt report should also show you the total amount of money you’re owed by your customers, the average time it takes each of your customers to pay and projections of your debtors. This is where Cloudfy’s useful aged debt functionality can be really helpful.
Using smart cashflow and debtor-tracking tools, your financial data can give you a clear overview of your past, current and possible future debts. You can put credit rules in place for each customer, based on their payment history, and you can actively manage overdue accounts.
Because reporting is straightforward, you can regularly review accurate information about your outstanding invoices and late-paying customers. You can prioritise your management processes based on the size of the debts, the number of outstanding payments, and due dates.
Managing aged debt
B2B customers who make bulk purchases often rely on their approved credit terms with you and are likely to make more purchases as a result. This will keep your purchases flowing, but it’s important to minimise risks for your business.
With a Cloudfy B2B ecommerce solution you can view the debtor days relative to your credit terms. You can also see which customers are paying you quickly, helping to minimise your level of debt and keeping your business in a good financial position.
To stay in control, you can make sure each of your customers can only place orders using credit while their open orders are below your defined credit limit. If they go over their limit, they won’t be able to use their ‘payment on account’ option. Your customers will be able to check how much of their credit allowance they have used and their remaining credit limit.
Easy to administer
The process is straightforward. An administrator can set a credit limit for each customer when the account is created and can review customer credit limits, their used and remaining limits at any time.
To make it easy for your customers, alternative payment methods can also be set up. Depending on their buying patterns, you can decide which orders are taken into account when new orders are placed.
Balances can be updated to be either positive or negative, adding or subtracting from the existing balance.
If customer accounts are shared across multiple websites, the administrator can manage the scope of the balance that is to be updated. There’s even an option to send a Credit Update email to the customer, notifying them of their balance change. Your reports can be filtered based on a transaction timestamp, a description of the action, and the balance change.
If you are doing business in several countries, your payment terms might need to be tailored for the local market. Differences in typical payment deadlines, legal requirements, local competition, and pricing all need to be taken into account. Your customer credit risk profile could look very different.
Cloudfy gives you the flexibility to set different payment arrangements for the same parent company in different countries. You can create a secure business model for each country, taking into account specific local risks.
To find out more about how Cloudfy can help you to manage the risk of debt for your business, talk to one of our experts.