Knowing your customer: Get a handle on collecting receivables
From time to time in the course of conducting business, I have come across clients who refuse to pay on time, even if they have the funds available. Let’s face it, especially now, with the so called cash crunch going on, people are holding onto their funds more tightly. They find unique ways to pay on their time line instead of yours. Not only does this disrupt your cash flow, but it also strains the relationship between you and your customer. There are ways in which you can get a handle on your cash flow while still maintaining a good relationship with the customer. For instance, stress to the client to keep the lines of communication open. We know that things can be forgotten, especially in the course of business, however, it shows integrity when a client calls because they anticipate not being able to make their scheduled payment. I have the practice of reinforcing to the client how much I value their business and that I’m willing to negotiate terms during extreme circumstances. This shows dedication and that I’m not only chasing the money. Even in the beginning, when I first sign on a client, I’ll ask them certain questions to get a feel for what ideas they have about handling money. Or, if the company is established I’ll check their credit rating at Dunn & Bradstreet. Just like when you open a credit account, the creditor has checks and balances in place to make sure that you are credit worthy, the same should exist when soliciting clients for your business. If at all possible, find a way to become familiar with their payment history. Ask to contact their former provider. Find out why they changed providers, and make sure that they don’t have any outstanding invoices with that former provider. It pays to do your homework and learn the payment behavior pattern, if at all possible, of your clients.
Partnering for your success
Jacqueline E. Williams
Financial Strategist
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