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“An Order is Only Complete When it’s Paid For”

You may worry about pressurising people about late payments. You may even convince yourself that the fault lies with the Royal Mail and that waiting a few more days won’t really cause too many problems.

Don’t go there!

Why should you let late payers get away with it? They are costing you money.

Don’t lose sleep about chasing customers who owe you money. They’re late, and that’s the end of it.  Why would you want to do any more business until they pay up?

Remember:          You not in business give things away.

What does it matter if your customers threaten to take all future business away?

Do you want customers who don’t pay?

Remember:          As important as the cash is, the time they take to pay you is crucial too.

If you don’t get paid promptly, you’re better off without them.

More importantly, it costs, as you could need to borrow to cover your cash-flow gap.  They are using your cash!

Remember:           Every day your customer delays makes your cash position worse, reduces your profit and costs you money. You cannot afford it.

This is a greater risk for a new business who too often to get their first orders from the bad payers. This is no coincidence. They are new to business, confident and a little arrogant. Bad payers can spot this before they’ve set foot in their office. They hope that fledgling businesses will let them stretch out payment. They are past masters at waving the prospects of big orders in the future in front of new businesses.

Don’t fall into this trap and always check out potential new customers and their payment record with others, and don’t, I repeat don’t worry about chasing outstanding invoices.

If you need a reminder of a simple way to do this go to THINK CASH - The Rules of Credit Management

That’s Think Cash!

 

 

A fish only sees water it doesn’t see anything else

It’s true isn’t it, if you told them about another world they wouldn’t know, they never get out of the water, they don’t see anything else, they would be terrible businessmen.

That’s what I do, I get out of the water and I look at businesses through fresh eyes, which reminds me of Champagne Charlie.  He was a management consultant who specialised in the manufacturing sector, Charlie claims he can go into any factory and reduce their costs. Quite a claim.

Well, a company in the West Midlands challenged him. One at the end of a busy high street.  Charlie was in the managing director’s office and he got carried away, he blurted out, ‘anybody could walk into your factory and find ways to improve your efficiency’.

The MD didn’t take kindly to this, but instead of throwing him out challenged him, he walked over to the window and said, ‘see all those all those people walking down the road. I’ll pick one person, you go down and ask him to come into my factory and see if he can find ways to improve my production. If he does, I will give you a crate of champagne.’ Charlie couldn’t resist.

They went over to the window, Charlie nearly died. It was lunchtime and the road was packed! The MD pointed out a short, fussy looking man in a pair of slacks wandering along the road carrying a load of books. Charlie went down and approached him, explained the situation to him. The guy was intrigued and agreed. Charlie took him down to the shop floor and left him there. Charlie then sat in the outer office waiting, trying to convince himself that he hadn’t been an idiot and regretting ever having made such a rash comment.

Eventually the stranger came back and together they went back into the managing director’s office. The stranger then explained that he was a teacher, he’d spent his life in schools and therefore knew nothing about factories. Charlie’s heart sank. He then said he had a question.

It was “why were the machines laid out in the way they were”. He explained that as each machinist finished a job, he watched him walk to the other end of the shop to hand it to the next machinist. Why they weren’t next to each other?

There was a long pause and then the managing director said, ‘Well, do you know you’re right, we never even thought about it, each time we buy a new machine it is simply put in the next available space. You have just saved my machinists a lot of time, which for us is money.’

Charlie proved his point, got his job, a case of champagne and has dined out on the story ever since!

So, are you just a fish in the water or can you look at your business from outside?

That’s Think Cash!

© Tony Dalton

Think-cash.co.uk

 

 

What I learnt from Paul Getty

He was an oil man who in 1957 was named by Fortune magazine as the richest man in America, which in those days meant the planet. He made his money in oil in the state of Oklahoma, and then in 1949 he spent nearly $30 in Saudi Arabia looking for oil, it took him four years and eventually he found it. This is what made him one of the richest men in the world.

He was an interesting man and as a young man I read his autobiography, it was fascinating but there was one part I will never forget.

He said that if you want to start a business don’t work for a mega company work for a small one, as while working in a small one you will see and learn, as they won’t hide away all the crisis’s.  You will see them, and even be part of solving them, you will learn the importance of cash flow.

I was in my early twenties when I read this, working for Unilever, and it was so true, as in large companies there are silos and everyone works inside a silo, and never moves out of their silo.

When I decided to start my own business, I left my silo and floated off myself into the world of small business imagining I knew it all.   I didn’t, suddenly life was different, all those company support mechanisms had gone.  I got orders, but people didn’t pay me.

In fact, I found that most of my first customers were taking a long time to pay, and I learnt my first cash flow lesson.  If you are too keen for the order you pick up the bad payers.

I then learnt that there are companies who will suck you in and then come up with every reason not to pay you.  Others will want your expertise, be very friendly but won’t pay you.

Which leads me to ask you how many people have you given freebies too because you wanted to be nice and then nothing came of it? That was another thing that made John Getty so rich.  He didn’t do freebies.  He even put a pay phone in his house!

Now that’s Think Cash!

© Tony Dalton

  author of Cash Management