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Accounts Receivable - "Is it an asset to your business, working capital, a cauldron of liabilities and problems, or something else again?"

Business owners and their managers consider Accounts Receivable to be an asset because accounting convention says it is a Current Asset.

Accountants recognise Accounts Receivable as a Current Asset and a component of the business's Working Capital.

Credit and Accounts Receivable Managers understand Accounts Receivable reveals how much of their company's cash is sitting in their customers' accounts and a picture of the organisation's relationship it has with its customers.

Unfortunately, business owners and managers, tend to treat the Accounts Receivable as a definable fixed asset such as a block of land with a fixed value and low maintenance costs. In doing so, they underestimate the investment in protecting the value of their Accounts Receivable. As a consequence of such thinking, business owners and managers may subsequently find this asset to be nothing more than akin to a block land at low tide by the sea.

The day of the one-dimensional manager or employee is fast disappearing. Some people would say, employing the one-dimensional employee is already gone. To employ people only for their professional or work skills means your company risks losing business.

There is one exception to this rule. There are those employees who are above average at their trade or better than average as fee earners. Unfortunately, these same employees may not always interact with your customers appropriately. In these exceptional situations, a different format of working with these employees is worth considering to maximise their earning opportunities. After all, although they may have the potential to earn above average revenue for your company, if their attitudes and behaviour drive your customers away, then rarely will you see that earnings potential.

Moving on, I acknowledge most employees cannot be good at all aspects of work. However that is not the point. In essence, what I am saying is that you must look for those employees which are good at their work, and who understand the bigger business picture in which they operate. The bigger picture is of course, you want employees which attract business, not those which make the business experience a nightmare.

When your employees are interacting in any capacity with your suppliers and customers, part of what they are doing is "selling an image of your business." This means at all times, you want employees who are good at their work and show why your company is the best one to do business with in the marketplace.

Therefore when employing anybody, you need to consider how they can best  "sell" the benefits of trading with your company.

Following are four examples of managers and employees which are not selling a positive image of their business.

1  Management has decided the company will not employ a dedicated receptionist to answer the telephone. All calls are therefore routed through an automated telephone system. Usually with such systems the caller is invited to "press # for so and so, etc. or press "0" to speak with the next available person.

Two things usually happen - (i) no one answers or (ii) a busy person in an administration area picks up the phone and responds to the caller in an unprofessional or unhelpful manner.

2  A supplier calls the CFO / Office Accountant about an unpaid account. The caller is informed the CFO / Accountant will call back. The CFO / Accountant fails to telephone the supplier to answer their enquiry.

3  An overworked disenfranchised warehouse person does not care if a damaged or the wrong product is sent to the customer.

4  Customer enquiries are ignored by salespeople too busy "making another sale". 

The list goes on and there are many other similar examples which may highlight your company's lack of interest in engaging with suppliers or customers. Unfortunately today we seem to operate in a business environment which suggests selling the positive reason of doing business with your company is not valued.

Consequently we can tend to edge towards despair of finding a supplier who can assist our business grow, or a customer willing to pay on mutually agreed terms. In this situation, the company which has employees willing to assist and be friendly is like a beacon of light on a dark night.

As our friends in the marketing profession continually ask us "What is your point of difference?" It may be, your point of difference are your employees who are all focused on "selling why it best to do business with your company"