Cutting Debtor Days Without Damaging Customer Relationships
A collections protocol that gets you paid faster — without the awkwardness that causes SMEs to avoid the conversation
Who this is for
SMEs where debtor days exceed 45 — or where the finance team avoids chasing overdue invoices because the sales team has asked them not to. Particularly relevant for B2B businesses with a small number of large customers.
What it costs you to ignore it
The diagnosis behind it
This playbook is triggered by a Red or Critical finding on:
Vital 2 — Working Capital & CashThe Protocol
Pull your aged debtor report. Segment by: current (0–30 days), overdue 31–60, overdue 61–90, overdue 90+. Calculate the total and the weighted average debtor days.
For the 90+ bucket: call each customer personally. Do not email. Understand whether the delay is a dispute, a cash problem, or an administrative failure. Each has a different response.
Implement a standard collections sequence for all future invoices: reminder at day 25 (before due), follow-up at day 35, escalation call at day 45, formal notice at day 60
For your top 5 customers by outstanding balance, negotiate a payment schedule if they are consistently late — formalise it in writing, even if informally agreed
Review new contract terms: include a late payment clause (1.5–2% per month), require advance payment or part-payment for new customers in the first 6 months
What you can do yourself vs what needs help
This is entirely executable internally. The only external input that adds value is a legal review of your revised contract terms — a one-time cost of ₹5,000–₹15,000 that protects every future contract.