“I have noticed that the people who are late are often so much jollier than the people who have to wait for them” – E. V. Lucas
Most accounts receivable professionals would agree with that statement. Every late payment has a cost to business. So much time can be wasted chasing down payments, sending reminders, listening to explanations and excuses, and, perhaps most costly of all, watching client relationships crumble. Not to mention, it’s a right pain in the ARse (that’s a little joke for all you accounts receivable professionals out there). The best accounts receivable professionals have a finely tuned skill set that combines financial nous and sales knowhow.
What we’re talking about here is the unique ability to bring home the bacon whilst ensuring the customer relationship remains intact (future bacon). These kinds of accounts receivable professionals are a rarity and that skill set is made complete due to their time in the trenches and gut instincts. They understand debtors, know how to speak to them and can potentially save a company millions.
The credit control industry will tell you that it’s unprofessional for business owners or sales people to follow up on late payments, stating that there should be a clear separation between sales and accounts receivable. But, of course, tell that to the owner of an SMB and see how helpful that is when they are both sales and accounts receivable, and ultimately the ground zero manager of finances.
And there it is, strangely, late payments are considered a financial issue for businesses, when in fact, they are often an indicator of deeper problems. Whether they are product, operational or customer service related, the best accounts receivable professionals understand the cause and effect relationships of late payments.
But what about SMBs? Where are they to get the insights to effectively manage their finances? The answer is data. They need data on the cause and effects of both prompt and late payments.
What makes a prompt payer?
Before you run wild looking for what causes those late payments, it pays to delve into the positive and assess what creates a prompt payment. We surveyed over 150 people from small to medium sized businesses to find out more about what makes them pay late and pay on time. Our survey highlighted two key points you should always keep in mind, especially if your customers are small businesses:
1. It’s often the business owner themselves that pay the bills – that’s right, busy old Joe Bloggs