As noted in a previous blog outlining the consequences of invoice disputes, we noted that businesses write- off roughly 4% of credit sales annually. For a $10 million company, that means $400,000 each year! If that same company was able to reduce bad debt write-offs by 20% That would equate to $80,000 in annual savings which could then be used in many different ways to grow your company or enhance your company culture.
What would you do with all of that additional cash? Below are a few suggestions, but it’s your money so spend it however you wish!
Charitable Donations – Donate the money to your favorite charity, and make a difference for someone that is struggling. According to non-profit Save the Children, $80,000 would provide basic needs for nearly 240 children in third world countries for an entire year!
Employee Bonus – Give your employees a bonus for a job well-done and retain your top talent. If you only employ 80 people they could all get a $1,000 bonus. Now wouldn’t that be nice?
Lower Prices – Saving $80,000 could allow you to reduce or at least freeze your customer pricing. While this may not mean much in the grand scheme of things – lowering pricing by just a few cents could mean the difference between winning and losing a deal – especially in distribution and other industries with very low margins and significant global competition.
Capital Investments – What capital investments could you make to improve your business? For $80,000 you could make some significant improvements to your accounting or ERP business software. You could purchase a new piece of equipment or a new delivery truck. You could upgrade your computers and infrastructure. And $80,000 would make a nice down payment to expand your facility or to move into a better building.
Invoice disputes often end up as accounts receivable bad debt write-offs and have a significant effect on your cash flow. In most cases you can avoid invoice disputes if you fix internal problems – such as sending the invoice on time, make sure the invoice is correct and not missing critical information, and making sure the customer can easily understand the invoice and the payment terms.
There are simple things you can do to avoid invoice disputes. An automated credit and collection system like Anytime Collect can provide even more savings through automation while providing a centralized system to manage disputes with escalation to management when needed.
We have written numerous white papers and have recorded many webinars which outline some of the simplest yet most effective things you can do to improve your accounts receivable processes and reduce your accounts receivable bad debt. All of these resources are available for free download in our resource center.