The early bird… Bend with…
The early bird…Gets the money
We seldom have the luxury of digging into how we ended up with a nasty collections issue. All we know is that a customer who’d always paid a bit late, but eventually did, suddenly didn’t. And, then it got ugly and out of hand. If we wound the clock back, we might know the moment when we should have acted to cut it off at the pass but didn’t.
And that’s pretty much the answer…The time to act is when our gut tells us it’s headed in the wrong direction – whether that’s at 45, 60 or even 90 days. That’s the day we need to take the bull by the horns. And just as that metaphor implies, there’s a danger involved. But ignoring it is even more filled with peril and lost profits.
Frankly the best time to address the matter is after we close the sale, or when the install is completed. That’s the perfect time to come to an understanding on what you expect and what they’re willing to do. If you want your invoices paid at 30 days and they say they pay everyone at 45, you can agree or not.
No matter the agreed term, the point is to establish it. That way if six months out if they start to drift past the agreed deal, you have a better chance of making a course correction.
As the old saw goes, never put off for tomorrow what you can do today. Or even more apropos there’s “In for a penny, in for a pound”. More to the point, we need to act when it’s a penny and not a painful pound.
Next up: When to say enough.
Bend with …the breeze
“It’s our policy”. It’s that irritating excuse that we hate to hear and regrettably experience way too often. That catch-all is often just an excuse for a lack of sensible customer service. And if a business lacks the common sense and empathy to deliver what its customers want, it inevitable get what it deserves.
Ignoring what we want as buyers means that we’ll look elsewhere. And when enough customers do that, the business fails. So maybe we all need to look inwardly and make sure that our policies fit what our customers want.
Admittedly there are some areas that can’t be all that flexible. Take past due invoices. If we allow those 60-day receivables to stretch even more, our businesses’ existence is at risk. But if we can’t find ways to deal with the problem – one that’s agreeable to everyone, we also lose.
Maybe that flexibility is a deal that gets the late payer to pay on delivery for the next few orders and add 25%. By ponying up that extra money, over the next few months we can eliminate those past due bills (and more importantly) avoid adding any more to the pile!