Surviving the downturn part three – When it goes wrong

Who owes you, babe?

Many people hate conflict, especially with their largest customers. And for sure, facing-up to slow and bad paying customers by being too aggressive too early, inappropriately or tactlessly, can be a quick-fire way of losing them!

Yet no matter how special the customer may be, providing you have supplied what you contracted for and your Contract of Supply was well crafted, there can be few valid excuses for delayed payment.

Once customers of any status know they can breach their agreed payment conditions with impunity, they will have every good reason to continue doing so.

Be sure, they will.

Customers ‘in distress’

This is one of the few situations where you may not wish to unleash the ‘dogs of war’, to get paid what you are rightfully owed.

Sensitively dealt with and appropriately judged, handle these circumstances right and you may win friends for ever more.

Examples may include:

  • a new company starting up, whom you may want to support because they have something special to offer and you trust their business plans;
  • an established loyal customer going through short-term difficulties which you understand, whom you know well, value and have faith in;
  • large quoted companies who seek a special favour at the end of each of their periodical reporting cycles to delay their payments to you to help make their published balance sheets look stronger (it happens), in return for their loyalty and with early payments afterwards>;
  • very occasionally, a really attractive deal for you with great prospects, where a truly valued customer has taken an acknowledged risk in using your product or service, and their income from it has been slower than expected.

However, the very first requirement in all such circumstances must be that your defaulting customer ‘comes clean’ and can make new promises you can believe in. (As you should with your suppliers, if ever in this position.)

Let’s be clear though. There can’t be very many of these special exceptions a successful, sustainable supplier can accept.

Do they really owe you?

The first step in collecting any over-due payment must be to check out all the details.

For example:

  • do you actually have a formal Contract to Supply, signed and sealed?
  • have you fulfilled all your part of the Contract?
  • and have you met all the ancillary contractual conditions in terms of the paperwork?

If you haven’t got all these details right, be sure any omissions will come back to haunt you!

ASK for payment!

You might be amazed how often buyers report that suppliers don’t actively chase up due payments. So much so, you may wonder how some suppliers ever survive.

The lesson is this. If you don’t ask, you will always be at the back of the queue. To many junior administrative staff, your bill is just one of many to be paid – even though to you, it may be all critical.

So do ask early (“Is our invoice ready for payment?” “Do you need anything else from us to pay us on time?”), and then ask often!

Recognise and avoid ‘fob-offs’

Not many organisations actually ‘like’ paying their bills – although many responsible ones will count doing so as a badge of honour. (You can often spot them readily – have a look at their Balance Sheet in their published accounts.)

Note for the others, consistently high creditors may inevitably suggest ‘credit strain’ – where they are probably using their suppliers to fund their debtors? Be warned!

Typical fob-offs not only include the infamous ‘The cheque is in the post’ excuse, but also ‘There is no-one in to sign your cheque today’, ‘We are still waiting authorisation’, ‘We don’t seem to have a purchase-order number for you’, ‘We can’t find your invoice’, or ‘Your invoice must have missed our computer run this month’.

Aren’t they annoying?

But best not get mad – get even by being prepared to pre-empt all these.

By Jeremy Thorn

Jeremy Thorn is the founding President of QED Consulting, a qualified Executive Leadership Coach and also Non-Executive Director of several fast-growing businesses. He is also the author of several prize-winning business books and a frequent speaker on management topics internationally.

For further information visit JeremyThorn.co.uk or email Jeremy@JeremyThorn.co.uk

First published by The Telegraph Online Business Club

  Share:

Leave a Reply

*