WHAT CHANGES HAS YOUR BUSINESS MADE TO GET PAID?
Change in the business world is happening all around us. We see these changes through reduced consumer spending, government intervention in the world of credit, and directors' responsibilities, etc.
We also know business prospects vary from industry to industry because of these changing times and the GFC. Incidentally, to think that the GFC is over or anywhere near the bottom, is plainly false. There is still some way to go before we can even say the GFC has bottomed.
In the current business environment, we note that businesses are reviewing the way they sell. For instance, they are looking at different marketing and sales channels and using Agents, extended operating hours, increased exposure on the internet, networking etc.
Rarely to date however, have we seen these same businesses review their credit sales and accounts receivable processes or strategies. For instance, a review on the credit worthiness of customers, looking at different payment methodologies or the need of more accounts receivable resources and a better respect for the accounts receivable functions, are just a few aspects requiring change.
I also respectively suggest, the past passive/reactive world of credit and accounts receivable strategies are no longer effective. After all, once your business hands over the goods and services - the customer not only has your product, it has the power on whether they will pay you or not.
From another perspective, changing to, or maintaining aggressive sales and accounts receivable policies and strategies, are equally doomed for failure. The same reasons mentioned previously for the passive or reactive approach not working, apply equally for aggressive strategies. In addition, the high cost of EFFECTIVE debt collection, and the ramifications of not being able to recover your accounts under your aggressive practices, need to be factored in to your overall business costs.
It is also wise to remember, whilst you chase a customer for payment of the last sale because they are on the stop supply list , there can be, or should not be, any more sales. If more sales are sanctioned, what was the point of the stop supply list in the first place!
The answer to meet the conflicts caused by change, is a strategy of assertive sales and assertive accounts receivable. Both functions need to be reviewed at the same time because they are intrinsically linked together.
For instance, sales are said to be made, but these transactions do not become sales until they are paid. Future sales also cannot occur if the customer is on stop supply or has a poor payment history. Furthermore, if you don't get paid often enough, at the end of the day, you may 'sales', but you don't have a business.
On the other hand, assertive strategies of sales backed by assertive accounts receivable, allow you to focus on three objectives.
(i) A minimum of work chasing up payments for existing sales, whilst not having to run around chasing payment in order to protect the next sale.
(ii) Making future sales for existing customers, which cannot be made, if the customer is on stop supply.
(iii) Selling to difficult customers and those with poor payment records, which is another positive outcome that occurs when you have an assertive sales and accounts receivable environment.
At the end of the day, I could talk forever about these subjects. However I reserve those stories for future blogs. My suggestion to help you manage the change happening around you, is to start creating assertive sales and accounts receivable practices and strategies. Initiated properly, these changes will help protect your future sales and cashflow.
May you be paid today rather than tomorrow.