As we pointed out in our last blog, automating your credit control function is a great way to get your outstanding invoices paid. But there’s another element of your debt collection that’s just as important – and that’s having a great understanding of where your cash is coming from (and when).
Setting clear, realistic targets for cash collection will help you get back in control of your cash flow – and give you the funds you need take the business forward.
A bigger focus on cash
When you’re working with an online accounting system, like Xero, you have the power and the data to hand to really get control over your cash.
Having targets in place is a great way to motivate your finance team and give them a clear goal to aim for. Using the reporting capabilities of Xero, you can pull together numbers for the cash you collect from each customer on a monthly basis. And with these numbers in the bag, it’s easy to set achievable targets for future cash collection, based on the empirical data you already have in your accounts.
It’s important to try and stretch your cash collection capabilities, of course, but make sure your targets are realistic, rather than just pie in the sky – and this is where knowing the detail around your numbers really adds value.
Know your numbers
Having a handle on your business numbers will really aid your target-setting process. And with the capabilities of cloud-based business intelligence tools, it’s easier than ever to break down your data and pull out the insights you need.
As business advisers, we know the value of using the right tools for the job. And using a forecasting solution, like Spotlight Reporting, helps us take the core data from your Xero accounts and present it in clear, graphical ways that help your numbers really resonate.
Forget about dry, complex spreadsheets full of incomprehensible numbers. What we do is present your data to you in meaningful charts, graphics and diagrams that help you get to the bottom of your cash.
And you’re not just looking at your historic cash figures here. With Spotlight’s metrics and forecasting functions, we can project your cash collection into the future and give you even more detailed guidance on the most achievable targets to set for the team.
Give yourself a debtor day target
Reducing your debtor days can have a big impact on your cash flow. And setting targets for customer debtor days puts a real impetus behind your cash collection and debtor tracking.
The combination of Xero and Spotlight Reporting gives you all the information you need, making it simple to find the average debtor days for each customer. We can sit down with you to agree on a suitable target for reducing each customer’s average payment time and put metrics in place to measure this over time in your Spotlight information.
With a clear goal to aim for, you’ll be surprised how much difference a few small changes to your cash collection processes can make.
Xero Trifecta: get in control of your cash
A targeted focus on improving cash collection is so much easier when you have the right tools, and the right professional advice, at your fingertips.
Enter our Xero Trifecta business system. You’ll have Xero as your financial hub, and Spotlight Reporting to project your cash collection into the future, and have the comfort that it’s all being taken care of – ahead of time.
Get in touch to arrange a free Xero Trifecta session and find out how to improve your cash collection.