By Gerry Barrett
Sales Director CMOS
The Ward Group
1st August 2018
An efficient ledger management strategy is crucial to improving a business’s cash flow and reducing the risk of incurring debt. Ledger Management Services (LMS) are a cost-effective alternative to using a debt collector to settle outstanding balances on the general ledger. A small-to-medium enterprise (SME) may not be equipped with the right tools to implement a proactive ledger management strategy. This can have adverse effects on the business such as outstanding invoices and increased time spent trying to reconcile the business accounts.
There are many benefits to employing a ledger management company rather than using debt collection agency. LMS services are carried out in the business’s name so that a positive relationship can be maintained with its clients. Ledger management services include the implementation of a credit management system to ensure the SME is not taking the risk of providing services when repayment is unlikely. This is an important step that will allow the business to identify its best customers.
This service typically includes an initial clean-up of the company’s general ledger to collect any outstanding debts owed by clients. Some debts may be uncollectable, these are known as bad debts. Once the bad debts have been identified the SME may wish to engage a debt collection agency to chase the outstanding amounts.
Why use Ledger Management Services?
- A SME’s principal focus of is often growing the business, so there may be poor focus on credit control or limited resources
- Cash-flow is typically the biggest reason that businesses are struggling
- In house credit control personnel can be expensive (annual costs in excess €28,000)
- In house credit controllers may leave the job, take sick leave, holidays time etc.
- SME’s very often have no written ‘credit policy’
- Properly managed ledger can result in better access to funding
Ledger Management Services can be tailored to any business providing an effective all-in-one solution to the above problems.
What is Included with CMOS’s Ledger Management Solutions?
- Remotely monitors the SME’s ledger
- Maintains the ledger in good standing
- ‘Always on’ monitoring and corrective actions, no backfill required for missing staff
- All communications in-bound and out-bound will be in the name of the SME (White Label)
- Collected funds are paid directly to the SME
- SME will have username and password access to CMOS portal to view activity on their ledger 24/7
- Amicable collections activities are included in the service
- Seamless access to legal collections as required (Legal fees paid separately)
- Collect and collate all data from the insolvent company regarding outstanding invoices
- Match invoices to debtors
- Collect outstanding debts via seamless amicable and legal collections
- Collect outstanding debts and bring the book up to date
- Report on uncollectable debt
- Deliver final report on the book condition
- Continue to monitor, manage and maintain the book to agreed rules / standards
By outsourcing ledger management Services to a reliable third party, a steady cash flow can be realised. This can allow the company’s man-hours can be refocused on achieving the company’s objectives. Ledger management services utilise the best accounts receivable systems and processes to identify debts that are likely to turn bad and give the business the opportunity to address outstanding debts before they reach a stage where recovery is unlikely. Credit management systems are implemented and correctly managed to reduce disputes or queries against invoices raised and offer debtor finance solutions such as invoice factoring.
CMOS’s dedicated team of specialists can advise of the best solution tailored to your business. For more information please contact CMOS Sales Director, Gerry Barrett at GBarrett@wardgroup.ie.