In This Episode
One of the dirtiest of little secrets we’ve discussed related to business ownership on this show over the years is that as a small business owner you’re also running a bank. With all the talk of recessions and tough times ahead, if you haven’t had this issue before, chances are you’ll be dealing with some slow paying customers over the next year or so. Today’s show is to help make sure you stay on top of your cash flow, particularly as it relates to those folks who are extending their credit with you.
During the show today we shared several personal stories as well as those of several clients and things they’ve done to get paid. Some of the highlights include:
- Do Some Digging: start with some research on the customer who owes you money. Have there been any recent news releases about their business? Ask around to other folks you know who provide products or services to this company to see if they are experiencing the same thing.
- Call vs. Email: sometimes a simple phone call can help get things moving vs. sending that 8th angry email demanding payment which gets ignored and leads to a 9th email and so on. It’s much easier to hid behind email
- Ask: ever ask your customers for their financials? You wouldn’t think twice if a banker asked to see your financials so why should you act any different when you’re playing the bank for your customers?
- Something vs. Nothing: it’s always best to get your customers paying something vs. nothing. Get them in that good habit of sending money your way.
- Big vs. Small: the approach to a big company vs. a small company will usually be different when it comes to collections. With a big company chances are all you have is an 800 number to call which never results in getting to a live person. You’ll likely only have an “email@example.com” email address where you send your invoices into what can seem like a black hole. These bigger companies also will likely have more hoops for you to jump through up front in terms of becoming a qualified vendor let alone the myriad of things you have to do to submit your invoice in a way that easier for them to pay. And then they’ll still wait 90-120 days after that to pay you…but they will pay you. On the small business customer front, you’ll likely know who the accounts payable person is. Heck, you’ll likely know who the owner of the business is so your approach here needs to be a little more personal. If they aren’t paying you or are slow to pay you it’s likely due to either them not being happy with your product or service or that they are in a financial squeeze right now. Your job during these situations is to remain relatively unemotional as one of the things you’re trying to decide in addition to how to collect money that’s owed to you is whether or not you want to continue doing business with this customer going forward.
Hopefully the show today gave you some ideas for either how to avoid getting into a big hole with customers who owe you money or if you do get into that situation how to approach it so you’ll be successful in collecting your money and hopefully salvaging a customer going forward.