‘Money’, as the old saying goes, ‘is a dirty word!’
There’s an old saying in business which, in my time at a very large German corporate I used to visit some or our joint ventures and hear Lord X (to keep him anonymous) bellow often (and usually whilst banging the boardroom table), “Business is business, but cash is King!”.
It’s one of the most valuable pieces of ‘advice’ I have ever had the good fortune to receive.
One of the most valuable ways you can focus your efforts to build your business success is to ensure you have healthy cashflow.
In other words, make sure you get paid the right amount on time, by the right people, at the right price, and that you do the same.
Very often I find myself working with companies, of all sizes, to strengthen their cashflow. In many cases the bulk of it is easy to put right: just get your customers to pay up on time.
However, a great many cashflow issues are created because we have a habit of being a bit ‘too British’. What I mean is that many business owners and leaders tend to avoid talking about money….and end up paying the consequences.
If someone owes you money on a certain date, then they should be paying you on that date. Fact!
Obviously, the intricacies of building a strong cashflow go far beyond just getting people to pay on time, but this probably has the single biggest impact.
So, here are some tips for developing and strengthening your cashflow – easy to do, and great for your business:
- Know your customer! Obvious isn’t it? Be clear who you’re trading with, what type of organisation they are, what assets they have, and, for peace of mind, take out a credit check too (#BizTip: if you have business banking services at your bank, these checks can often be obtained free or at nominal cost). More detail and knowledge is better than less.
- Minimise your risk. Seek up front part-payment if necessary, ensure your terms and conditions make it clear you own the goods, or may withdraw/turn off the services in the event of late or non payment. If necessary, seek a written guarantee from the directors/owners.
- Make sure you have fit-for-purpose terms and conditions, covering payment, at what point full ownership is transferred, guarantees and liability. If you need to update your terms, many local law firms can do this at a sensible cost, or speak business support groups for guidance.
- Keep up to date! Even before payment is due, make it clear to your customer when payment is due and that you know it’s due. If you are being paid late, you are effectively funding their business (which is what banks are for). You’re running a business, not a bank, so remind and chase that payment. It’s your money, after all!
- If you do need to enforce your terms, or take legal action, be decisive and clear about your aims and objectives in doing this. Consider reasonable offers if necessary. Remember you’re running a business so paying legal fees, and using up valuable time and effort in chasing late payment is taking you away from the customers who you know and trust.
Sir Clive Woodward, World Cup winning England rugby coach, used the acronym T-CUP: Think Clearly Under Pressure.
When the pressure on you, and your cashflow issues grow because of late payment, think clearly about how you will resolve it, and take action.
To find out more about improving your focus, your cashflow, as well as the benefits of professional coaching and mentoring, particularly in developing leadership, strategy and growing a business, please contact me:
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© Adrian Malpass 2017. All rights reserved.