Credit Matters Blog

A Clean Debtors Or Creditors Ledger Offers A Picture Of Commercial Reality And Peace Of Mind

Kim Radok 06 October 2017


The benefits of having clean Debtors and Creditors Ledgers include operational efficiency, clarity of decision making, cashflow and profit maximisation, and peace of mind because there are no hidden and damaging surprises. There will always be unexpected surprises in business of course which we can rarely anticipate. Our focus however, is on the hidden and damaging surprises which should have been identified if our business processes were operating properly.

 Clean Debtors and Creditor Ledgers also provide a solid picture of the status of your business's current assets and liabilities.

The key aspects in creating a clean Debtor and Creditor Ledgers are as follows.

(i) Common sense - which means understanding the most liquid of your company's assets, its cash, can be stolen or left in your customer's bank accounts if not managed properly. In addition, poorly maintained and supervised Debtor and Creditor Ledgers, contain unpleasant surprises with a potential disaster waiting to happen and are a fraudster's delight.

(ii) An understanding that technology provides us with a set of business tools. When used in the correct manner, like any other tool, technology tools can assist you to operate more efficiently. In the wrong hands, technology can equally be used to efficiently steal your cash.

(iii) Professional and well-trained employees who are committed to your business's success, do cost a little more than those less well trained. From day one of employment however, this negative cost differential quickly disappears in to a positive benefit on every level of the business. Professional and committed employees save money and reduce costs. Their experience allows them to deal with customers professionally and to quickly identify the slow payers and fraudsters from the genuine customers. By working efficiently, professional employees save the costs of fixing the mistakes of inexperienced employees and poor operating processes.

(iv) After every crisis; it takes the best employees combined with the right set of technology tools to fix the problems caused by poor management of the Debtor and Creditor ledgers.

(v) Your business's cash can only be managed properly by reconciling your suppliers and customers accounts. The reason why problems are not exposed before they reach crises point is due to the lack of reconciliations of these accounts. If you do not reconcile your suppliers and customers accounts, you do not manage the cash in these accounts. On the other hand, if your suppliers and customers reconcile your accounts, they decide what to do with your business's cash when they discover a mistake in their favour.

When you reconcile suppliers and customers accounts regularly, experience shows the costs associated with completing these exercises is recovered quickly, and at times, your business will be ahead many more dollars than any employee cost expended.

Managing your business's cash means exactly that; managing it. If a business does not manage their cash assets adequately, inevitably their long-term financial reputation is at risk. Clean Debtors and Creditor Ledgers means there is less opportunity for fraudsters to steal your cash and potential adverse surprises are quickly exposed. Finally, there is peace of mind that you are doing everything right, and that is priceless.