Debtor management and prevention
Prevention is cheaper than collection
Debtor management is about keeping your order-to-cash chain tight: from quotation to payment. Companies that structure this process — with clear credit limits, timely invoicing and consistent follow-up — have fewer outstanding invoices and faster access to liquidity. Business information sources consistently emphasise the same point: prevent outstanding receivables from growing unmanaged.
Practical measures
- General terms and conditions — payment term, interest, collection costs, retention of title where relevant; have these reviewed legally. See Contracts and documents.
- Credit check — for larger orders: Chamber of Commerce register, annual accounts, references or external credit scores.
- Invoice immediately — delays in invoicing give debtors extra time without you noticing.
- Monitoring — reporting by bucket (within term, 7/14/30+ days overdue) and a designated person responsible.
- Advance payment or milestone billing — for projects involving material costs or insolvency risk.
When things go wrong anyway
Having a clean file gives you an advantage: invoices, proof of delivery, accepted terms and conditions, and prior correspondence. This speeds up both your own demand notice process and any subsequent handover to a collection agency.
Preparing for interest and demand notices
By stating upfront in your terms and quotations how you handle interest and extrajudicial costs, you avoid disputes when the time comes to send a demand letter.
Frequently asked questions
What is the purpose of general terms and conditions for debt collection?
They make payment terms, interest, costs and sometimes choice of proceedings predictable. This strengthens your position in both out-of-court negotiations and any potential legal action.
How do I recognise a debtor who is at risk?
Look for patterns: repeatedly paying just late, excuses about "internal approval", a sudden lack of response, or reports within the industry. Use objective sources where possible; doubt may be reason enough to require an advance payment.