Keeping Tabs on your Customers

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It’s important for you to know your income and outgoings in order to control your cash flow. 

Being aware of which customers are consistently late payers and taking appropriate action quickly will help to ensure that debt doesn’t become out of control.

Whilst we don’t usually issue rules to our clients, we cannot stress enough how important it is to issue your sales invoice as soon as the job is finished, or the product delivered.

Of course, the best way of keeping tabs on customers and their payment habits is to maintain an accurate sales (customer) ledger. 

There are two stages to this:

  • Issuing and recording all your supplier invoices

  • Recording payments received by customers

If your business is very small, or the volume of sales invoices is low, this ledger could simply be a list of invoices and payment dates.  However, if you use accounts software it is important that all payments are matched to invoices in the ledger.

It is a good idea to issue monthly statements to your customers as a reminder of the balance due, but this can only be done if your sales ledger is accurate.  This is particularly true if you are going to use your accounts software to generate statements.

How can you tell if the sales ledger is inaccurate or incomplete?

  • Payments on account not matched to invoices – a minus displayed as a single transaction or balance in the ledger

  • Old transactions displayed in an aged debtor report*

  • Invoices reported as unpaid, when you know they have been paid

  • Details which contradict your knowledge of the situation or differs from your paper records

  • Queries, disputes or missed payments from your customers

 Most of these errors can be quickly resolved using a few easy to follow procedures and routines.  If you would like some help with your sales ledger, please contact Bookworx for details of our Bookkeeping Health Check.  If you have large volumes of invoices to send out and you are short of time, we can also help you with this too.

* An aged debtor report is a list of all outstanding items in your sales ledger.  The report will list all unpaid invoices according to the age of the invoice and will help you to identify which of your customers are either failing to pay, or paying late.  This is a vital tool for your credit control procedures.

Need some help with your bookkeeping? No problem, give us a call, we’d be happy to help