Originally published on Industry Update
Polite people don’t talk about money. As Kristin Wong wrote in her New York Times article How to talk about money, “...many of us grow up learning that money is one of a few topics — like politics, sex and religion — that you should avoid in polite company.” This social taboo adds an extra layer of complexity for accounts departments in small to medium enterprises when speaking to their creditors, and it is costing businesses dearly.
“Late payments are taking their toll with nearly a third (31 per cent) of small business owners in Australia estimating their company currently has more than $20,000 in outstanding receivables,” according to Kochie's Business Builders' Cec Busby.
Cashflow is critical, nothing moves without it. ASIC states that poor cashflow is cited as a factor in 40% of business failures. Which means the important topic of cash flow needs to move further up the company agenda.
So, how do we ask about something that isn’t socially acceptable to speak about? It's important that this interaction builds rather than strains relationships with customers.
Yet, most companies leave this critical task to someone in the accounts department who: A) has never been properly trained to do the task, B) avoids the task in favour of other accounts duties, and C) would rather clean out the office fridge than call someone and talk about an overdue invoice.
Think about how credit control is conducted in your company. For most companies, credit control and accounts in general are not seen as part of the sales process or as customer engagement. They are often referred to as if they exist on a solitary island. We see credit control as a success-defining element of a customer-centric approach to customer service and sales.
As Industry Update Publisher Scott Filby wrote in his article Why are we waiting?, “Companies only grow by re-investing their profits, and they can’t do that until they get the money to which they are due.” Citing a survey by Xero of Australian businesses Scott wrote “Small to medium businesses are losing access to as much as $7 billion a year” thanks to Australia’s larger enterprises paying invoices late.
Investment in people is as important if not more so than investment in the new shiny toys of automation and AI - and credit control is all about people. It is the human touch and the relationships built from the very first interaction with a customer that will determine that state of your cashflow. If you are only thinking about this when an invoice is 31 days overdue - it’s too late.
Yet, most companies leave this critical task to someone in the accounts department who:
A) has never been properly trained to do the task,
B) avoids the task in favour of other accounts duties, and
C) would rather clean out the office fridge than call someone and talk about an overdue invoice.