Getting The Money You Are Owed

Getting The Money You Are Owed
 
Well now here we have the most common area of complete and utter failure, and the area where policies abound and are only out-numbered by the number of people, both yours and theirs, who ignore them.
 
I have been into so many companies that say "can you help us write a plan that will raise £100k or £1M or £10M or whatever"
 
"How much are you currently owed"
 
"Oh about £100k or £1M or £10M or whatever, but a lot of that is un-collectable"
 
What!!!
 
"Yeah a lot of it is really old. There are a lot of queries. We had a salesman who conned a lot of people. We had a lot of problems with a particular line. We cannot find a lot of the customers. The paper-work had a lot of loop-holes"
 
"So what you are suggesting that we should replace these debts with funding from someone else, let's stand back we don't want to be killed in the rush"
 
Let me tell you a great secret, so secret that no-one but you and me will know this. This revelation is so great that you will be astounded by how brilliant I am. Are you ready?
 
You worked and you did not get paid for it.
 
It must be a secret because you will be amazed how many people do not know it.
 
• Giving someone credit is a privilege, not a right. Where has this myth come from that you have to give credit? Lazy salesmen, lazy customers, lazy administrators. Run this ad "Wanted salesmen who do not give credit"
• Giving credit costs a fortune, not only do you have to fund your own cash-flow, pay admin people to collect it and pay commission before you even know whether the customer will pay – what if they never pay. If you turnover £25M with a GP of 25% and a NP of 8% what happens if you write off £500k a year. Your GP does not change, you will still incur commission costs, considerable admin fees and cash-flow issues and your NP has just gone down by 2%. It is the same as paying someone £500k a year to never turn up, together with further costs of about £50k just to keep them happy.
• When do you start collecting? When the debt is overdue of course, no point doing anything before 30 days. Let me tell you something, the only time to ring a customer is before a debt is due. Was everything ok, have you got everything, who is approving the payment, when is your next payment run – oh don't worry it's not due yet, how are your kids? What is the point in ringing people after it is overdue to get them to pay? They have broken a legal agreement, your terms and conditions, arguably if you call them and tell them don't worry pay next week, you are breaking your own contract. Ring before it's due, inform them in writing that they have broken a legal contract as soon as they do. Who do you inform? The owner of their business, of course, do them a favour, let them know that their people are breaking a legal agreement.
• Charge interest on amounts due, every time. Why not? "Well it might upset them, they may not use us anymore" Why? Are your products so bad? Doesn't quality of product, quality of service mean anything? Are we suggesting that upset accounts clerks run businesses? You know what – I think not.
 
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