We all know reliance upon hope is a poor strategy.
Last weekend I travelled many hundreds of miles to the Rolls of Monmouth, a beautiful golf course set in the grounds of the former home of Charles Stewart Rolls, co-founder of Rolls Royce, in the hope that I would not only win the Teacher’s Annual Golf Tournament, but come home having cracked the magical and elusive >100 point/54 hole score.
Having played one round in preparation about three weeks before hand, it was never going to happen. I knew this as:
a) Every one knows that to be good at golf you need to be lucky, and to get lucky you need to practice
and
b) It’s the same approach as I took last year and the year before and it didn’t work then either.
And yet I still had hope, that the same input would somehow miraculously produce a different result, despite strong evidence to suggest that it wasn’t going to lead to a happy outcome
The parallel to some organisations approach to collecting cash is surprising, in some cases frightening.
I meet many business people, some of them quite established and successful who have a very slick business machine; Marketing on song, leads flowing, great closure rates, good margins, successful delivery, quality product & service, only to get to the end of the process where the invoice is printed, dispatched and then nothing, except good old hope.
Hope to get paid.
Hope that it won’t take too long,
Hope that the customer won’t go bust before cash is collected etc.
Sometimes they barely know who has their money, quite often extending credit to customers as
“…they paid last time…”
with little or no credit checking and vetting. Even where this is done, it is normally done at outset and then never or sporadically refreshed.
Hope is relied upon, some pay and some don’t. Some are just playing the game and treating you as a cheap source of finance. Some are dishonest and have no intention of paying and some disorganised, the invoice languishing in the long grass waiting for some eager beaver to hunt it down and request payment.
The hunting often doesn’t begin until people start getting a little hot under the collar, a little outrage creeping in to over come the wonderful reserve and reticence that is sometimes experienced with when it comes to asking for money, despite in many cases it being payment for a job well done.
When the hunting does start, with a little steam escaping from the collar, it is generally not pleasant, the dynamic is all wrong from the outset. The payment is late, you want to shout and scream but customers are important. You hear words escaping that you just don’t want to say:
“…oh that’s ok…”
and
“…no problem, I understand…”
It’s either this or the other end of the scale, in which case you will not only jeopardise a quick payment but make it unlikely that you will see another order.
The good news is that this is all avoidable; all that is needed is a decent process.
There are two simple steps that can be taken that will impact the speed of payment.
Firstly, engage early. Call before the payment is due. In this way you are altering the dynamic of the customer contact. This is a service call to ensure all is ok with the invoice and that it is with the right people. Of course the opportunity of reminding people of terms and checking how payment will be made should not be missed.
Secondly, make the calls regularly and consistently. Customers will get used to the regular contact and discussion about invoices. This takes a little time and discipline but it will yield results if you stick with it.
The need to operate consistently cannot be over stated. Focused resource works best which is why an increasing number of companies choose to use a service. Our service delivers the two steps above and more, generally delivering results after 6 – 8 weeks of operation.
You can reasonably expect a reduction in your aged debt of around 30% after 2 – 3 months.
If you would like your credit control to be more effective than my golf, then why not give us a call and we will give you a free assessment of your current process, procedures and results vs. an industry benchmark where available.
020 7100 5978
I do hope to hear from some of you!
Simon
