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Common Traps for Small Businesses Managing Their Own Accounts Receivable

A smooth running accounts receivable department that ensures funds are flowing into your bank account on time, each month, form the lifeblood of a growing business. Your ability to expand, provide better service, hire new talent, invest in new equipment and improve your office or store fit-out all hinge on incoming funds.

Sadly however, many businesses stagnate and underperform because they fall into some common traps that prevent them from collecting all of the money that is owing to them. The good news is, these traps can be avoided if you are aware of them and institute adequate procedures to overcome them.


Common accounts receivable traps and how to avoid them


  1. Late and inconsistent follow ups


Following up on overdue accounts as early as possible is key to recovering them. Your prospects of recovering a debt dwindle the longer it is overdue. Consistency is also required to maintain the right amount of pressure on the client. If you don’t do this, many will happily sit on your money for as long as you allow them.


Avoid this trap by: instituting protocols to follow up on overdue invoices with a firm reminder at regular intervals and escalate when necessary.


  1. Failing to monitor payment plans


Negotiated payment extensions and payment plans can spiral out of control if proper records are not taken and compliance is not monitored. Clients may even use this as a tool to defer or avoid payment if they discern that you are not diligently keeping a track of the arrangements.


Avoid this trap by: confirming all alternative payment arrangements in writing and maintaining accurate records so that if the debtor falls behind you can easily determine how much is owing.


  1. Being too lenient with debtors


If you are perceived to be too lenient or negotiable on your credit terms, clients may assume that you don’t mind waiting for your money. They will continue milking you for credit extensions so they can use available funds to pay other creditors who rigidly enforce their payment terms.

Avoid this trap by: enforcing your own terms and conditions strictly and only giving extensions in exceptional cases.


  1. Not seizing opportunities to outsource


Like any aspect of running a business, operating your accounts receivable efficiently comes at a cost. Businesses must calculate how much time and resources are spent chasing payments, liaising with debtors, monitoring payments, doing background checks on debtors and initiating legal action and consider whether they would be better off outsourcing these tasks to a professional accounts receivable and debt collection agent.

Avoid this trap by: weighing up the cost of operating an in-house accounts receivable department efficiently, against the potential benefits of applying that time to income earning activities.  Consider whether outsourcing to a professional debt collector and recovery agent would alleviate stress, expense and inefficiency in your business.


Where can I get help with my accounts receivable?


We have a number of brilliant solutions to relieve you of the burden of chasing your own accounts and get your accounts receivable humming. Talk to us now about how we can improve your business.


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  • I have worked closely with Boston Commercial Services for over twenty years across four different companies and would not work with anyone else in regards to helping me with my outstanding accounts. Whenever I have started a new role, the first thing I am asked is, “How would you go about cleaning up our accounts receivable ledger?” My answer is always the same – “The first thing we need to do is call Boston Commercial Services”.

    Voytek Bradford

    Freedom Foods Group Limited (National Credit Manager)

  • I have known the principal of the BOSTON Group (Derryn HARRISON) as well as key staff members (including Ben GOWER) for well over 2 decades and have been using their professional services for myself as well as for Powerhouse Logistics Pty. Ltd. on a regular basis, not only in Sydney but on a national basis.

    At all times BOSTON have been extremely pro-active, attentive, courteous and professional with all matters we threw at them. Their advice has always been extremely sound and commercial and I find them to be a "breath of fresh air" within the legal fraternity and have no hesitation whatsoever to highly recommend them.

    Peter Brueckner

    Powerhouse Logistics Pty Ltd (CEO)

  • Expect A Star has worked with The Boston Group for 10 years. In this time we have appreciated the ongoing support of Boston for all of our collection and legal requirements. Like most businesses cashflow is critical to ongoing success and growth, with Boston we have found a partner who are an extension of our business and play a key part in our cashflow management. The Boston Group bring a level of expertise to our business which is valuable and coupled with their excellent customer service we look forward to continuing to work with them for many years to come.

    Ryan Meldrum

    Former CEO

  • I have been using the services of The Boston Group and their legal entity for over 11 years. During this time I have found their service to be impeccable, delivered with the utmost professionalism and integrity. The vast majority of cases that I have placed with Boston were far from straightforward, requiring legal acumen and delicate handling. Having used all methods available without success to procure payment, I confidently placed these matters into their safe hands. In all instances a successful outcome was achieved.

    Mark Parish

    Credit Manager

  • SNP Security has had the pleasure of working with Boston Commercial Services for the past 11 years. Boston has played an integral part in the continuing success of SNP Security’s low DSO’s, 90 Day % Debt & of course Bad Debts Written Off.

    Amanda Griffiths

    National Administration Manager

Boston Commercial Services prides itself in offering specialised, professional services, through a highly experienced team of debt collector, with personalised client attention.