So, you’ve closed on an M&A deal and you’re going to make this new asset part of your existing organization. Diligence revealed that this addition to your business will support your strategic...Read more »
Get paid. Faster!
Slow-paying customers can cripple a small business and throw a wrench into even a well-thought-out cash flow management plan. This problem is so widespread that now there is even an initiative for sharing deadbeat customer nightmares via hashtag #GetPaidNotPlayed.
Not all slow-paying customers are deadbeats. There are a multitude of reasons why customers don’t pay on time. Reasons run the gamut from severe (the customer is experiencing financial difficulty) to mild (the accounts payable clerk is on vacation). The solution lies in knowing our customers and managing those relationships to reduce the risk of delinquent payments. Customer relationships need to be managed beyond the point of providing a top-notch product or service all the way through to the point that payment is received.
Investigate why the customer is slow-paying and address the specific needs of that customer.
Here are some relationship-centric ideas for managing your accounts receivables:
Build a Relationship with the Accounts Payable Department:
- Get to know the accounts payable clerk for those customers who frequently owe you money.
- Build a personal relationship. Find out their names and introduce yourself. The clerk will feel valued.
- Be friendly and open the conversation by asking if they have all the needed paperwork to facilitate payment.
- Call the clerk on a Tuesday, Wednesday or Thursday. Mondays are normally chaotic and on Fridays everyone is distracted by weekend plans.
- Ask if there is anything you can do to facilitate the payment process. Can you sign up for EFT payments, invoice more frequently? Just be professional and find out what is going on.
These folks are as important to your business as those who authorize the purchase order. Tell them “thank you”. Send them a holiday card.
Customer is experiencing their own cash flow problems:
- Thoroughly investigate your customers’ credit worthiness before extending credit. If warranted agree to cash-in-advance terms.
- Consider breaking up your invoices into smaller units to make it easier for customers to pay you.
- Negotiate for partial payment, if necessary.
Large companies cash management strategies are designed to pay as slow as possible. If you are working with a larger company, remind them that you are the “little guy” and request to be put on an immediate pay list. Small suppliers are often valued for their quick response and reasonable prices. Immediate payment terms are a reasonable request in exchange.
Remember your job is over when the check clears!
Want to discuss strategies for getting paid faster with the experts at Fahrenheit? Give us a ring at 804-955-4440 or email email@example.com.