Tag Archives: growth

Stand and Deliver!

If you’re in business the chances are you love sales.

Sales mean customers value your hard work, your innovation, your creativity – what’s not to love?!Cash is king for business

In the modern world very few businesses sell without offering credit to their customers. (If you’re a retailer who accepts cards then potentially someone else offers credit to your customers…)

In this case more sales are good but what you really need to focus on is more payments from customers.

One of the things I’ve noticed is that when businesses grow everything gets busier. It’s amazing how sales go up and all of a sudden customers take longer to pay. When you send out more invoices somehow more go missing in the post (*although this might just be an excuse for late payment…).

The result of this is that although you are busier, needing to buy more materials and pay more wages there may not be any more cash at hand to pay the bills.

So how do you manage customer credit? Here’s my action plan:

PREVENTION

Make sure you have chosen to offer credit to each customer, not just let them have the goods on a promise that they’ll pay later.

Do you know the customer? Have you done business with them before? It seems simple, but first impressions from a face to face meeting can tell you a lot about the customer.

Also take time to look at their business premises, does it look organised and well looked after?

Using credit applicationsYou probably have a new customer form to record delivery and contact addresses etc. It’s a good idea to include your standard payment terms (eg 30 days) and ask for trade references from existing suppliers.

Credit checks can also be helpful, and there are a huge number of different agencies who offer these services. However the best option is to make the decision based on your own impressions.

UP TO DATE

This is the number one thing about accounts – you can only make good decisions if your information is up to date. It’s worth paying for a book keeping service to make sure that you can rely on your accounts.

INFORMATION

Once you’ve offered credit to customers and your accounts are up to date you need to keep track of who owes what:
– How much do they owe?
– When did they last pay?
– Are they buying regularly but not paying regularly?
– Have they been buying regularly and then stopped, without paying what they owe?
– Are there some invoices which seem to have been overlooked for payment? (Maybe they have genuinely been lost in the post?)

Don’t let issues go unchecked. Maybe this seems arduous, but this information should mostly come from your book keeper/ accounting software.

COMMUNICATION

It’s important to share some of your information with your customers.
– Send out statements regularly, at least once a month.
– Send copies of old invoices if they appear to have been overlooked, email makes this really easy.

If it’s proving difficult to get money out of certain customers you need to rely on the personal relationship we discussed before. Phone contact is usually more effective than letters, it is harder to ignore.Keep up phone contact with customers

On the phone, be realistic. Being rude might get you paid this time, but will probably not keep the customer in the longer term.
Ask what the situation is, is there a problem? Try to respond creatively to what you’re told – if bills are paid on a certain day of the month you could work around that. If there’s a hold up due to a delay in your customer’s customer paying you could take that into account.

Do keep a record of your conversations though; do you always get the same excuses or the same promises? If you end up needing to consult a solicitor because you can’t get the customer to pay you will need to have a record of what you have done to try to recover the debt, but this is the very worst case scenario. Cash is king

It really is worthwhile thinking about your process for keeping track of customer credit – you’ve already done all the hard work to find the customer and make the sale so getting the payment is the final piece of the jigsaw.

What is a business strategy?

Strategy is a word that comes up over and over again in business. You’ve got to have the right strategy; marketing strategies, finance strategies, HR strategies; you can find all sorts of strategy building advice and templates online (Google produces 638 million results for the search term “business strategy”); but really… What is business strategy?

A strategy is a like a route mapMichael Porter (very clever man) defined a business strategy as the “broad formula for how a business is going to compete, what its goals should be, and what policies will be needed to carry out those goals”.

That’s a pretty good definition, in essence a strategy is the route map for getting from where you are now to where you want to be in the future.

So to work out a strategy you need two things: a clear picture of what “here” looks like, and a good idea of where “there” is.

What?!

If you don’t know where you want to be in the future this is a good time to stop and think about it!

Where do you want to be in 5 years time?Why are you doing what you’re doing? What would you like to be doing? What do you enjoy and what would you like to change? This isn’t your strategy – they are your goals or objectives.

These are big ideas, they take a bit of thinking about. But what I’ve learned is that you don’t need to know all the answers for certain at this stage – if you start now you have time on your side, time to move the goal posts more than once!

Possibly an easier question is “What don’t you want? What shouldn’t the future be like?” most of us have a pretty good idea straight away.

Which way?

A map is no good unless you know where you're starting from!You can’t build a strategy without a good idea of your current circumstances. The route map analogy is useful here – a map won’t help you get home unless you can work out where you are starting from so it pays to take some time to write down what you’ve got that you like and enjoy and what you are not so happy about.

Strategy time!

When you know where you’re starting from and where you’re going to the final piece of the jigsaw is to link the two up – set out your preferred route from “here” to “there” in a series of manageable steps.

It is often difficult to see where to start in order to make progress (if it was easy you would have already got there!) but it can be much easier if you break the route down into smaller steps. Over the following years you can weigh up every decision you make against this strategy and see whether or not it will help you reach your goal.

Meaning is like psychological oxygenAt the moment I am reading The Good Psychopath’s Guide to Success by Kevin Dutton and Andy McNab. In it Andy McNab points out that “meaning is like psychological oxygen” – knowing why you’re working hard is the most effective personal power source.

He then goes on to tell a story that illustrates how (in his words) “There’s nothing like a task that is both pointless and physically draining to rip the **** out of you, especially if you don’t know when it’s going to end.”

To me this is where the biggest benefit of a strategy is – if you know that you’re on your way to your better world your effort is not pointless. You are working towards something, you can measure your progress along the way.