Every challenge in business is a chance to examine and get better. If you have customers not paying invoices on time, your first reaction is to get on the phone and chase down the slow payers. In fact many organizations have people and departments dedicated to credit collections. But… what if you took the opportunity this challenge affords, and dig a little deeper… Now, I am not saying you shouldn’t take action to obtain payment for overdue accounts; however, putting a little time into some analysis can reveal vital information about your business. Often slow or none payment of accounts has a lot to do with the service you have delivered to the customer. To find the root cause of any problem, the exercise of asking “Why” is a great place to start digging. Keep on asking “Why,” and then “Why” again until you get to the root issue(s).
You may find many issues including…
- A flawed sales process – you did not capture what the customer needed
- A flawed order taking process – you may have sent the wrong quantity
- There may have been a misunderstanding of price
- The delivery may have been too late for the customer
- A failure in the production process indicated by product quality issues
- A flawed packaging process – the product arrived broken
- A flawed shipping process – you packed the wrong product
- Decide if you really want to do business with this customer… are they costing time and money? Fire them. You choose who you do business with.
Examining your slow paying accounts can be a wealth of information to be used to find weakness in your business. It may have little to do with the finances of your customers, or you may have chosen to do business with weak customers.
Your customer maybe using your problems as an excuse, get better and do not give them any excuse.