Debtor Management

Let’s be honest – debtor management is one of those topics that gets pushed to the side until it’s too late. But right now, in New Zealand’s shaky economy, it’s becoming one of the most important conversations Bookkeepers need to be having – both with clients and in their own businesses.

When times are tough, people hold onto their cash for longer. The result? Small business owners end up waiting weeks (or months!) to be paid, and the domino effect of late payments creates a strain that ripples across entire industries. Bookkeepers see this up close every day. You’re not just reconciling numbers – you’re watching clients juggle bills, delay investments, and stress about whether they can pay their staff.

The good news? You’re in the perfect position to help.

Why debtor management matters more than ever

Cashflow is the lifeblood of any business. Yet in the current climate of rising costs, high interest rates, and unpredictable customer behaviour, it’s more fragile than ever. A stack of overdue invoices isn’t just an accounting headache – it’s the reason some businesses can’t pay wages, cover tax, or keep the lights on.

For Bookkeepers, poor debtor management has a double impact. Not only do you see your clients struggling, but your own business can take a hit if you’re waiting to be paid for your services. It’s stressful, and it eats into the energy you’d rather be putting into helping people succeed.

Practical ways Bookkeepers can help clients with debtor management

This is where you get to shine as more than “the numbers person.” With your skills and systems knowledge, you can guide clients towards healthier habits. Some strategies that make a big difference include:

• Clear credit terms – Make sure clients have written terms of trade, and that those terms actually mean something. If it says “7 days,” help them stick to it.  
• Invoice straight away – Work done? Invoice sent. The longer the delay, the easier it is for customers to ignore.
• Use automation – Most cloud accounting systems can send reminders before an invoice is overdue. Show your clients how to set it up so the system does the nudging for them.
• Run debtor reports – Ageing reports aren’t just reports. Talk clients through what the data means, highlight patterns, and suggest action steps.
• Have an escalation plan – Support your clients in developing a flow: reminder, phone call, demand letter, and if needed, debt collection. The process should be clear and consistent.

By putting these steps in place, you’re not just helping clients recover cash – you’re giving them peace of mind.

Don’t forget your own backyard

It’s easy to preach best practice, but harder to apply it to ourselves. Many Bookkeepers admit they’ve been guilty of letting clients pay late, just to keep the relationship smooth. But the reality is, if you don’t look after your own debtor management, you risk your business running on fumes.

Some simple shifts can protect your practice:

• Engagement letters – Make sure every client signs one, with clear payment terms.
• Deposits and retainers – Particularly for new clients, getting some money upfront reduces risk.
• Regular billing – Instead of waiting for year-end, bill monthly or by milestone. It keeps cash moving.
• Easy payment options – Think credit card, direct debit, or online links. Make it simple for clients to pay you.
• Know when to walk away – Chronic late payers cost more than money. They cost time, energy, and mental wellbeing. Sometimes letting go is the best business decision.

The role of the Bookkeeper: trusted advisor

Debtor management isn’t about being a debt collector. It’s about being a steady hand for clients navigating tough times. You can show them how late payments chip away at their profitability, limit their growth, and create unnecessary stress. You can also model good practice in your own business, showing that boundaries around payment aren’t just professional – they’re healthy.

By leading these conversations, you position yourself as a trusted advisor. Not just the person who reconciles accounts, but the one who helps businesses survive and thrive.