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Tony’s Tip No. 18: Make the accounts people your friend

In most companies, the accounts people are those who deal with invoices for payment.

The problem is that our payment is not the most important thing in their lives, even though it is in yours.  The poor accounts department gets hassled by everyone.  They get hassled for many different reasons, which makes life for the accounts ladies even more stressful: the boss wants the latest figures; the sales reps need the accounts to chase customers for payment, as they don’t think it is their job; then there are the customers, who can just as easily turn shirty when they’re chased.

The list is endless is it any wonder that she feels like this:

Acct Clerk

So you need to break this cycle to help yourself and your business.

The easiest way to do this is to make a friend of the accounts department, so they enjoy talking to you and don’t dread your call, which will mean reasonable conversations rather than slanging matches.

In our businesses we try hard to make friends with them and in fact at Christmas we send them chocolates. Think about it, at Christmas while the managers and sale guys are having fun the poor old account department is forgotten. Be friendly to them and you will benefit, your contact will help you by processing and getting your invoice signed quickly. Once you have built that relationship with your contact in accounts, your debt-chasing becomes much easier, and if you then follow the simple rules of credit management, your debtor days will start to come down.

We practice this and a while back we lost a big customer, I worked hard to get them back and after two years we got another order.  We sent over the invoice, and following our rules 7 days later rang to check whether they had got the invoice.  We were amazed by the result, they told us they knew we would call and were waiting, that they were already dealing with it and we would be paid on the due date.  All because we had been friendly and sent them presents at Christmas presents, and it was only a very small box of chocolates! But it is the thought that counts.

Tony Dalton

© Tony Dalton
author of Cash Management
published by A & C Black ISBN 978-1-4081-3984-4
Buy it here!

 

Tony’s Tip No. 17 – Keep in touch to help your cash flow problems

Hooray, at last the economy is starting to move, businesses are increasing their sales.

We have waited a long time for this.

However for many small businesses this is a very dangerous time.  To grow they need cash and the banks appear loath to lend.  This is a major problem for the SME sector as they don’t have the power of the bigger companies to delay their payments and use their suppliers to fund their growth.

I keep reading about government schemes to make large companies pay quicker, but what small business going to risk their relationship with their larger customer by insisting  they abided by the rules?

There must be a better way, and there is.

Recently I have been mentoring a supplier to the Engineering industry whose sales have risen by over 10% in the last five months while reducing their debtor days and extending their creditor days, with the result that their creditors are funding their growth.

How have they done it?  They follow the Rules of Credit Management, which are simple, but will only work if you make them a habit.

The rules to follow are:

  1. Confirm the payment terms as you take the order
  2. Raise the invoice when the goods are delivered.
  3. Seven days later ring the client to make certain they are happy with the delivery, is the order correct and do they have the invoice.
  4. Ask if it has been passed for payment,
  5. Then ask if it will be paid on time. (They always tell you it will!)
  6. Two days before the due date contact the accounts to ask when the cheque is going out.

My client followed these rules, by making certain that before they raised each day’s invoices they rung those clients whose invoices they had raised the week before.  The result has been that those customers who paid reasonably quickly started to pay on the due date, an improvement, and their bad payers actually paid earlier but still not on time.  They are working on them and expect them all slowly to come into line because as they keep ringing they are building a relationship with each accounts department.

The most interesting thing is that as their relationship with those clients is getting better so their sales are growing.  This is because their calls are seen as sales calls, not debt chasing ones.  So as their sales they can fund their growth, safely.

So as you grow the golden rule that is to “Keep In Touch”.

Tony Dalton

© Tony Dalton
author of Cash Management
published by A & C Black ISBN 978-1-4081-3984-4
Buy it here!

 

1 – The Rules of Credit Management

The Rules of Credit Management

Before you supply goods, make sure the customer has agreed to your terms in writing.

This is so simple and so often overlooked. There are many potential crossed wires when a deal is done. You think they have agreed payment within 30 days, but the customer thinks that it’s due 30 days from the end of the month following delivery.

Nothing much is done about this until after the goods have been delivered and someone is chasing payment.

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