Aged Debt Recovery Solutions for Businesses

Aged Debt Recovery is more important to businesses now more than ever during these periods of economic flux and uncertainty. Finding the ideal aged debt recovery solutions for your business are a key part of maintaining healthy cash-flow.

In today’s uncertain economic environment, businesses need to not only have strong credit control measures in place but also to address more urgently aged debt before problems mount and get out of control.[1]

Aged debt is essentially debt that is more than 30 days old on unpaid invoices. For businesses to run effectively it is important to strive to create a healthy cash flow because many good and viable companies often fall foul of this and fail to take cash flow seriously. Growth ambitions quickly become handicapped with the lack of a robust credit control system in place. [2]

Businesses need to address Aged Debt.

A key metric in debt management is to take Aged Debt, plus Invoiced Debt of less than 30 days to work out how much money is owed and how long ‘on average’ it takes for customers to repay debt (invoices). We call this ‘debtor numbers of days, or (DSO).’  Keeping the ‘debtor number of days’ to less than 30 is the target for most businesses to ensure a healthy cash flow.

Click here to use our free tool to find out what your average DSO is

This is where a good credit control function in businesses counts. Franklin James Credit Management (FJCM) has a strong reputation and enviable track record in this area.  FJCM step in and track and recover Aged Debt for clients whilst being pro-active in targeting customers to ensure they pay on time.

For example, if a client has one Aged Debtor that accounts for a sizeable slice of all outstanding debt, then careful targeting of that debt is a good solution.

It is also worth pointing out that some businesses are seasonal; therefore, cash flow becomes even more important at key times of the year where cash-flow is reduced.  A clear example of this is hospitality where certain months of the year are ‘bumper’ months and others quite lean.  If seasonal companies do not apply strong credit control measures in the better months, invoices may become overdue and a looming cash flow crisis beckons.

Also, worryingly the UK has one of the poorest reputations for Credit Control Management in businesses. Maybe it’s time to consider learnings from the US, where businesses have a much better reputation for ‘paying on time’.[3]

A report in 2017 stated that 11% of invoices issued by SMEs are paid late. [4]

FJCM offers a front-line debt recovery service that targets Aged Debt, even if businesses already have internal credit control functions in place.

FJCM offers a number of options to recover Aged Debt on their ledgers:

  • A regular monitoring service to review and recover overall debt on an-going/monthly basis.
  • Franklin James have the systems to automate invoice reminders with follow-ups.
  • Reinforcing Statutory and Payment terms.
  • Small Claims Court assistance.
  • Offering formal payment plan negotiation or mediation for Aged Debt recovery.

[1], London. Richard Button, Marek Rojicek, Matt Waldron, Danny Walker. Financing larger UK companies through covid-19 (September 2020).

[2] This is Myron Jobson. Ten of UK’s big businesses that fail to pay suppliers on time get named and shamed by the government (January 2018).

[3] Simply Business, London. Lauren Hellicar. 50,000 small businesses fold due to late payments each year (May 2019).

[4] Plum Consulting, London. The Domino Effect: the impact of late payments (December 2017).