Calculating the costs when an invoice is paid past it’s due date, and how to deal with customers.
Every day that an invoice isn’t paid it costs money. Sometimes this money is hundreds or even thousands of euro’s each month. Olav de Lange knows how you are able to gain an insight, and how to get the customer to pay in a proper contact.
It is tedious when customers don’t pay their bills. As an entrepreneur you would like to focus on other tasks. Invoices that get paid past their due date costs a lot of money. In addition the invoice, collection costs and costs for a lawsuit also need to be taken into account. According to the council for Judiciay, more than a million lawsuits are filed each year over outstanding invoices.
Utilising debtor management efficiently can help mitigate your losses. “The first step is gaining an insight. Debtor management offers a very useful insight into your customers. You can use this tool to gain an overview to see how much profit you could gain by optimising your cashflow” said by De Lange. Recently De Lange did this for a company that has a yearly revenue of two million euros. “They had an outstanding invoice amount of 400 thousand euros. This means a DSO of 72 days. This entrepreneur has loans at the bank with a rent of six percent. This means that pre-financing was costing the entrepreneur is company yearly 24 thousand euros. That is 333 euros to pay the rent each day!”