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Debtors and Creditors Management
Debtors and Creditors Management
Proper management of the accounts receivable and accounts payable function of any business is essential to maintaining a healthy cash flow position; ensuring that business operations can continue smoothly; and achieving business growth.
Most businesses have to provide goods and services on credit to their customers in order to maximize sales. The goal therefore is to provide credit to good customers who pay on time, thus minimizing the amount of bad debts incurred by the company. Debtor management therefore involves setting policies to manage how a company extends credit to its customers, and monitoring implementation of these policies. Four main decisions to consider in debtor management are: whether credit should be provided to customers; which specific customers should be given credit; the credit period or trading terms given to customers; and the maximum amount of credit to be given to a customer at any one time.
Creditors/Suppliers provide your business with the goods and services necessary to operate, therefore having a good relationship with your suppliers can be mutually beneficial. Poor management of your accounts payable can lead to reputational damage and suppliers and vendors will avoid working with your company. In addition, the company may be forced to incur late payment interest, which can hurt profits. Creditor management therefore involves maintaining a robust accounts payable process; documenting the agreed terms in a contract signed and held by both parties; negotiating longer credit terms (where possible); and building strong working relationships with suppliers.
What should you expect from this service:
1
Based on the nature of your business, we will help you develop policies, processes, and procedures to govern how your business extends credit to your customer base as well as how you pay supplier invoices
Have Any Question?
To provide low-cost, outsourced
finance and accounting services
to our SME clients within a
framework that assures control,
quality service delivery, and high
performance.
- +254 110 835834
- info@cfodhub.com
Have any Questions?
We provide low-cost, outsourced finance and accounting services to our SME clients within a framework that assures control, quality service delivery, and high performance.
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