A huge, massive, and ultimately the mistake that destroyed my IT consulting business was getting the money. I didn't have any trouble finding and converting prospects, nor setting up large margins, however, getting paid was a big problem from 1996 to 1999. Are you interested in getting paid faster, with less hassle and lower overhead?
Now I hear some of you saying, "Getting paid is a receivables issue, not a sales or marketing issue." When I noticed one of my clients facing this same problem they told me, "Don't worry about the collections part, it won't be an issue if we can sell more!"
Let me tell you right now, getting your money has to do more with sales and marketing than you could ever imagine. This misconception is why I and many people have trouble with this and are struggling in the business-to-business world.
In the consumer world, if credit is extended it's handled by some third party. For B2B, credit is expected, yet held by your organization. This puts you in the financing business. You're probably invoicing your customers, even flooring inventory in your sales channels.
My mentor pointed out that I was hardly collecting 1 invoice in 10 from my current outstanding receivables. He demanded I eliminate having any receivables at all. I gave the usual objection, "Thing might be different in the insurance business, my business is different, I need to extend credit to get contracts. My customers expect to pay in terms."
The truth was, my clients were getting free labor because they weren't always paying. This made more sense when my mentor explained, (a) you are not a bank, and (b) who said you had to extend credit.
This all might make more sense today with current foreclosure rates and the credit crunch, but this was the raging 90's. Here's what my mentor suggested to turn around my bottom line:
While I never eliminated having receivables, I quickly avoided additional problems in collections. Assigning my aged receivables to a third-party let me focus back on growing the business and these new steps kept money flowing towards my organization.
The selling tie in comes from improving customer qualifications to include financial measures and ability to pay. Target buyers in your market place, many times I was just happy to do my presentation with anyone, regardless of their ability to pay. Too many sales people make this mistake too.
You may be asking, "How does all this help me get paid faster?" Payment history is often built right into credit scoring, clients with good credit will pay on time to protect their score, and buyers with money have the means to pay for your solutions. It's really that simple, only do business with people who have money to spend.
© 2008 JWH Consolidated LLC, All rights reserved.
Justin Hitt helps business-to-business industrial and technology firms make profitable sales in a sustainable way. For more on getting your money, visit http://cashmanagementsecrets.com/
By Justin Hitt at February 15, 2007 3:16 PM Subscribe in a reader