MY Total Office Solutions discussed how “debt is a big issue”, and how it keeps track of money owed.
MY Total Office Solutions’ ‘debtometer’
The company, which is a Cartridge World franchise in Lancashire, England, discussed its “useful tool to help money collection”, noting that “if your business is like ours, debt is a big issue for you. You know the saying ‘revenue is vanity, profit is sanity’. But cash is king! Many a profitable company has gone bust, because it has run out of cash to pay wages and suppliers”.
It added: “In our printing solutions and office supplies business, most of our business is transacted on 30-day credit terms. And it’s vitally important that we have visibility on how much money is owed to us, at any one time, on a daily basis. To do this we use a simple tool that we call a debtometer. The debtometer is updated on a daily basis and provides us with an exact snap shot of our outstanding monies on account (debt to you and me).
“As well as clearly showing your whole team how much total money you are owed, it breaks it down into sections of days overdue. We use this to identify the days of debt that we need to work on the most; this could be 60 to 90 days, over 90 days or 30 to 60 days. In our business we also have a target, to keep the average days of debt under 45 days. As you can see, our debtometer is also used to measure this.
“The debtometer is our high level debt dashboard view, which is underpinned by a structured collection process. It works for us, and maybe it could work for you too?”