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Spotlight on Aged Debt

Cash collection refers to the process of gathering and managing incoming payments from customers for goods or services provided. This procedure is crucial for maintaining a company's cash flow and financial health.

Here we share a snapshot of how a focus on cash collection can really have a big impact on your business.  
A new client had a transactionally focused finance team, with a process for aged debt of sending of statements of account to clients. However, without the full month end process that includes preparing and reviewing management accounts, and reconciling the balance sheet, the increased aged debt balance was not picked up on. 

On first review, Finance with Flow put a focus on the aging of the debtors ledger, and was able to highlight to management that over £300,000 was 120 days or more overdue, where terms are actually 30 days – that’s 4 months overdue!

We highlighted the balance to the directors and relevant project managers, and put together a plan to reduce this balance. Within a matter of weeks this balance was reduced to less than £50,000, which we continue to work closely with the Commercial Team on.

This business has a net profit of £700,000 for the year – imagine if the amount had not been recoverable – that would have almost halved the net profit!

Finance with Flow tailored the approach to best suit the client, focusing on the companies individual financial needs and goals.

Combining strong communication with the client teams as well as comprehensive systems and process implementation, we were able to remove the risk of a hit to profit.

We know its easy to get so busy doing the actual work that looking at who owes you what can fall down the priority list, until it becomes a crunch point as cash runs out, and that is why we take the stress and worry out of it for you, we will liaise directly with your commercial team, and client commercial teams if you are happy for us to, to iron out any little niggles that are preventing payment, or take more forceful action if needed.

In this difficult economy, particularly for those in the construction industry, it is even more important to keep tight control over debtor balances and aging, nipping issues in the bud early.

Contact us today on or 01206 326620 and let’s chat through your needs. We can shape your success together! 

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