Debtor Management Project

Client Name 120+ Days 90 Days 60 Days 30 Days Current Total

$ $ $ $ $ $
Client 1 - - 4,356.00 - - - -
$ $ $ $ $ $
Client 2 - 2,714.00 - - - - -
$ $ $ $ $ $
Client 3 - - - 3,781.00 - - -
  -            
Totals - 2,714.00 4,356.00 3,781.00 0.00 0.00 0.00

1. Report on debtor management

- Review the aged debtor summary provided to you by your assessor to
identify issues within the financial report.
As we can see based on the aged debtor report shown on the top.
Client has debt for 90 days $4,356, Client 2 has debt for 120+ days
$2,714 and Client 3 has debt for 60 days $3,781

- Analyse the information in the report noting that the company’s usual terms
of payment are 10 days from invoice.
All the clients based on the report on the top are not paid off their
debt amount more than 10 days from the invoice.

- Using the Internet, research best practice debtor management and make
notes on your findings.
Debtors are people or businesses who owe you money. Effective
management of your debtors(often referred to as credit management)
will help you get paid faster and prevent bad debts. It will also help you
maintain a healthy cash flow.
Credit management includes:
 Collecting debts on time
 Setting credit limits and payment terms
  Credit applications and credit checks
 Enforcing a clear credit policy
 Investigate debtor finance.

- Provide a report for your CEO (your assessor) based on your analysis.
Your report should include:
- An explanation of the information in the aged debtor report.
A report that details the amount of money that the business is owed
by its customers by grouping and sorting the amounts according to
the number of days outstanding.

- Analysis of any issues with the company’s aged debtor processes.

The issues identified is some clients paid off the amount more than
10 days from the invoice which is the rule are they have to pay the
bill no more than 10 days from the invoice.

- Develop at least 5 recommendations that could be adopted by the

company in response to your analysis. This will also be based on the debtor
management research you conducted.
The top 5 recommendation

 Ask for a deposit

For any orders for goods or services, ask for a deposit
upfront.
 Hire a part-time debt collector or restructure
Determine whether any of your admin staff have time to set
aside to chase debtors. If not, consider hiring a part time
person to perform this role.
 Remove 30,60,90+ Days from statements
Change your statements to show Current and Overdue only.
 Offer better terms for payment upfront
Consider discounts for payments upfront (be careful with this
one as you need to weigh up the benefits versus costs - redo
your budgets).
 Charge interest for outstanding debt