You’ve done the work; you’ve provided the service - now it’s time to get paid. 

We’ve talked about payment methods before, whether it be cash, credit card or via an online payment gateway - but what about those customers that pay on ‘account’. We’ve all experienced it, you send the invoice, and then sit and wait, hoping it gets paid to your bank account. 

Days, weeks, even months may go by before you see a deposit in your account for an invoice you’ve likely forgotten you’ve sent.

The tourism and hospitality industry is seasonal, we all know that – if we were to take the classic farming cliché of ‘make hay while the sun shines’, it’s just as applicable to the tourism and hospitality industry, albeit without the tractors. 

It’s one thing to take advantage of peak season traffic, but it’s no good if the hard-earned money isn’t in your bank account to help with your business. Being able to collect what is rightfully yours can be a time-consuming exercise. Not only time consuming, but unnecessary when there are solutions out there to assist when it comes to debtor management.

Of course this isn’t applicable to all business scenarios – so understanding your own business and its current debtor situation is key in determining the best fit for you. It’s unlikely that a local coffee van operator is going to have a large debtor listing, so the need to focus time on debtor management is going to be at the lower end of the scale.

So, when is it applicable? Any time you raise an invoice and give it to a customer to ‘pay in their own time’, you’re creating a debtor, and this is where your debtor management process kicks in.

Using a cloud based accounting program like Xero is important when looking at debtor management solutions. When using Xero there are two easy options you could consider to manage your debtors.

Keep it within Xero

If you are sending your invoices directly from Xero, there are some very neat features that you can take advantage of to make the invoicing process easy for you.

  • Invoice reminders: You can switch on invoice reminder which alerts your customers that their invoice is due soon, due now and/or overdue. It’s automated and you don’t have to do anything. Ensuring you have up to date contact details (i.e. email address) is crucial to this being effective
  • Online payment gateway: Having an online payment option when you send your invoices makes it simple for the customer – if it’s easy for them, the likelihood of prompt payment increases. Refer to our previous article on “Cashless Transactions” for more information.

Look to a Debtor Tracking Add-On

The Xero App Store id a great place to start when it comes to finding a debtor tracking solution that suits your business. Chaser, Debtor Daddy and Late Chaser are just three options that can be integrated directly to your accounting system to automate the debtor ‘follow up’ process. Once the initial set-up is complete, these add-ons will then take charge of your invoices to ensure you get paid faster.

Some of the many features available through a third-party add-on that you can leverage to get paid faster include:

  • SMS and email reminders
  • Late fees
  • Overdue interest
  • Customer payment portals

These add-ons become invaluable when it comes to debtor management. Of course, everyone’s business is different, and the need for debtor management will vary significantly, so, do you research, or get in touch with your local RSM adviser to see where your business could take advantage of the tools available.

For more information

Please contact your local RSM expert to find out more information regarding advisory for your tourism business.