Don’t assume yourself into debt
Thursday, July 10, 2008/
You can’t operate at your best when you compromise the financial health and sustainability of your business. POLLYANNA LENKIC
By Pollyanna Lenkic
One of the many great learning experiences I had was the time we finally got the courage to invoice a major client for interest on very late payments.
I remember feeling sick about making the call – we valued our client and did not want to do anything to upset them. In a competitive market, surely they would just tell us to get lost and use another supplier.
We had spoken to their accounts departments many times and were not getting the result we wanted. We knew that continuing to chase this dept in the same way and expecting a different outcome was insanity. So we had to pull out the big guns, call the CEO who was based elsewhere.
Of course we procrastinated for a while, then with the realisation that if we did not act the business simply couldn’t afford to keep that client, no matter how great or how much we were billing them. We had to act.
So I made the call to the CEO of the company and explained that we could no longer afford to provide them with a service because it was having a huge impact on our cashflow. As I held my breath and waited for what I thought was the inevitable, I was pleasantly surprised.
- I was promised a quick resolution.
- The CEO expressed his upset about the fact that we were put in this position.
- He invited me to take tea with him at the Dorchester the following week and also followed up to ensure that we had been paid.
My learning went beyond the obvious: Don’t allow your debt to go unchecked.
I also learnt not to act on my assumptions. I assumed that I would lose the client by asking to be paid; that was far from the reality of what happened.
I also experienced the type of client that I loved working for, one that had integrity and followed through. I vowed that I would aspire to having the same traits with my dealings with my clients and suppliers.
The advice I would give to a younger me now would be:
- Pick up the phone as soon as it becomes a problem and speak to your client, telling them the impact it is having on your business.
- Follow up with a written request for payment, give a date and state what action you will take if this is not actioned.
- Check out your assumptions; they may not be accurate.
- Keep it professional, an exchange of information, and keep any emotions in check. Late payment is rarely personal or about you or your company.
- If the client did respond negatively, then they are a client worth losing.
- Be ready to lose your client and be comfortable with this.
Pollyanna Lenkic is the founder of Perspectives Coaching, an Australian based coaching and training company. She is an experienced facilitator, certified coach and a certified practitioner of NLP. In 1990 she co-founded a specialist IT recruitment consultancy in London, which grew to employ 18 people and turnover £11 million ($27 million). This blog is about the mistakes she made and the lessons she learned building a business the first time round and how to do it better second time round. For more information go to www.perspectivescoaching.com.au
For more Second Time Around, click here.