Every CEO, company president and business owner knows what a difficult, changing business climate we are living in. Everything is not as it seems to be.
In this economy, you need to be very careful who you do business with.
– Know how much credit you’re extending to each and every one of your customers or clients.
– Pay attention to any news that adversely affects the companies you do business with.
– Even an account you’ve had for years and always paid on time can suddenly have a change in payment habits. If and when this happens determine if there is potentially a payment problem in the months to come.
Unfortunately, today even people who have been in business for years can overnight be in bankruptcy. You don’t want to be caught off guard by the news if at all possible.
– Review your account receivables weekly. Not monthly. Not once in a while; but consistently.
– If a new company wants to do business with your company, ask yourself: why? Has this company used up all its credit with its current supplier and just trying to hang on by getting credit with you? This may sound like putting a pessimistic overtone on the excitement a new client or customer can bring, but the financial reality today is such that it bears being wise and prudent on your part so the business relationship begins, and continues, on a positive note. More importantly, you don’t waste your time and your company’s resources pursuing an account that will not bring the financial rewards you’re looking for with new business.
– Any new account that requires significant financial risk on your part needs to be run through a credit check. Even then there are no guarantees.
– And just because you play golf with your best clients or engage in other social business activities with clients, doesn’t guarantee payment for services rendered. Overdue and unpaid invoices can still happen.
After you take all of the precautions necessary you can still find yourself in a bad situation because someone went out of business. Don’t be paranoid. Just be very careful.
Most business people have problems asking for money. Remember: the money they owe you isn’t their money it’s your money in their back account. So if they are delinquent, make that phone call and ask for a specific date when they will be bringing their account up-to-date. Then consider if it is wise to offer them any more credit.
I know a successful business owner who has always said that the job or project isn’t done till the check is in the bank, processed and credited to your account. How true.