Get into the habit of entering all the debts you have to pay into your accounting package as soon as you get them.
Bill your customers through the same package.
Your accounting package can now give you “Aged Debtors” and “Aged Creditors” reports.
This report will give you what you owe (Debtors) and are owed (Creditors) broken into time periods.
- Under 30 days
- 30-60 days
- 60-90 days and
- over 90 days
At each time division, you want your Debtors to be more than your Creditors.
If so, you are not paying your debts faster than you are collecting money owed to you.
Store this monthly in the critical metrics spreadsheet discussed under “Necessary Metrics” below.
You will be able to spot any adverse changes within a short period and correct the problem.