ACCOUNTS RECEIVABLE 2012 - WHAT NOW?
The cheques received in the post have all been banked. You have also cleaned up and allocated the outstanding payments and a new Debtors Ledger is in front of you.
So what have you found and are you truthfully happy with the state of the Debtors Ledger? Even more important, what will your bankers think and say when they see these results?
If you and your bankers are not happy with the Debtors Ledger, what have you learnt from last year?
From another perspective, what are you going to do that will be different this year?
These are the type of questions which need to be asked and answered, if your Debtors Ledger is to look any better this time next year.
My previous Blog talked about starting work in October to get all the cash in by Christmas. However, the reality is that working to get paid never stops. Furthermore, it takes strategic and well thought out processes to get the cash and keep the customer. After all, getting the cash and losing the customer is not a good long-term outcome for your business.
Too many business people see their debtor accounts unpaid and panic. They then start demanding payments the customer may not be able to pay in the short-term.
These tactics not only cause distress to all parties, they motivate otherwise good customers, to buy from your opposition.
Our customers teach us all sorts of lessons of how to act in business. You only need to stop, look and think about how they operate their business to learn the lessons they offer. Unfortunately, too many business people do not take the time to learn these lessons.
So what you can do to get paid more quickly?
The truth is, there is no better place to start then to look at how your business pays its suppliers.
If you are amongst the few business people who do not play games with other peoples' money (remember Danny DeVito and the 1991 movie "Other Peoples' Money"), then you may have a few problems. Your road to learning how and why your customers slow pay or not pay you, may take a bit longer.
If you are in this business category, the quickest way to learn the slow paying tricks used by your customers, is to employ a genuine credit professional. Such a professional will have the experience of "walking the walk" and "talking the talk". With due respect, if your consultant has never worked long-term as a credit professional, you will only learn half of the lessons you need to learn.
On the other hand, if your financial controller/accountant enjoys hanging on and slow paying your suppliers, then you need go no further to learn the tricks of slow paying.
Why, because already, your financial controller/accountant uses many of these same slow paying tactics, month in and month.
The modern business world is particularly fragile at the moment, no matter what the economists and politicians say. Consequently, relying on last year's tactics and hoping you will be paid, are not the best cashflow strategies.
It is also wise to remember, when the customer has already received your goods and services, bullying tactics do not work. They just give your customers another excuse to slow pay you.
So, what are you going to do in 2012? Perhaps you will rely on yesterday's business practices to get paid. Alternatively you may decide to review and create more positive strategies aimed at getting paid quicker and more efficiently?
I suggest the later approach, of review and the creation of new strategies is the way to go.
May you be today rather than tomorrow.