We’ve all heard the saying “Cash is King”, it’s as true now as when it was first coined. Too often the businesses start by focussing on growth or profitability, but the really successful businesses focus on cash management.
So how do they do that? The obvious answer is having an excellent credit controller or department. The less obvious is equipping the sales team with the right attitude and skills to set up new accounts correctly.
Salesmen by their nature like to win the sale and move on to the next with minimum time spent
on process or procedures, yet a simple form or process that gathers the right information from the new customer will speed up cash collection.
A few tips are:
- Find out the correct contact details of the customers accounts department, names, addresses, telephone and email.
- Do you need a purchase order in advance of providing goods or services? Trying to get one after supply is more difficult when the customers motivation has gone!
- Check if they have a managed supplier service such as SAP’s Ariba, it means you are doing all the work and control is out of their hands when it comes to changing any payment terms.
- Do your payment terms match theirs? I.e. 30 days vs. 45 days – if they don’t match align them before supply.
- Check method of payment – direct transfer vs. cheque. These days cheques take up to 7 days to clear (makes your 30 days 37!).
- Have someone with the right skills and temperament to follow up on outstanding invoices.
- Have a process for collecting cash: phone call prior to due date to ensure everything is in order, emails and letters ready and prepared to send at appropriate intervals after the due date.
Stay on top of the cash and watch your business grow.
John Walsh (The Business Guru)
John is an international business consultant that has for the past 20 years worked with global organisations as well as small family businesses. He has worked with over 146 organisations and 29,000 people. Whatever your problem or issue – chances are John has seen it all before. www.breakthroughchange.com