You’ve heard it before, “Sure, we'll pay you in seven days.” Too often those words…
Why Your Values Will Improve Your Cash Flow
Aligning your values with those of your customers/clients and suppliers will greatly improve your cash flow.
Failing to do so will be to your detriment. But, there are times when you can’t control this and other times when you do need to.
Let me explain.
Recently I was nominated by someone else to be the purchaser of product that was to be shared between us. At the time, I wasn’t overly happy to have been nominated on a social platform without any discussion and question as to whether that suited me or not. I went along with it, knowing that I’d have control over the delivery and wouldn’t have to make the arrangements to collect my share from the other person who lives in a different city to me.
I was then left to deal with the supplier, find out the pricing, get the invoice and pay the amount in full. When I finally got the pricing, it did take about four weeks, I made contact through the same social media channel asking for an email address so I could send an invoice for their share of the costs, only to be told that they didn’t want to proceed.
Seriously! In a matter of weeks, they’ve changed their mind, haven’t followed up to let me know and then proceeded to berate me when I called them on their commitment to purchase.
For me, my word is my word. If I make a commitment to someone else, I follow through, or if for some really good reason, I need to change it, I’ll let them know as soon as I can.
That is one example of where I had the control over how I dealt with the transaction up-front and could have managed it differently.
One of my clients is not in that position.
He’s in the construction industry which is notorious for late payments, companies going into liquidation and words from builders that whilst they sound good don’t convey any commitment.
And then when the developer doesn’t pay the builder because of something that is unrelated to the builders claim for the sub-contractors, the builder doesn’t have the money to pay. The sub-contractors are left to flounder paying for the materials and wages without receiving the income in a timely manner. When you think of it, with an industry that is rife with late payments, disputes over payments, it’s no wonder that so many companies don’t last the distance and are forced to close down.
Whilst in my article How To Deal With The Christmas Cash Flow Crisis, I suggested communicating with suppliers and with customers or clients, in some industries that may not help.
When you’re contracting to the big corporates, you may also run into issues which my fellow Smallville contributor, Bronwyn Reid, talks about regularly. If that’s you, have a read of her articles.
On the tip side, I signed up a new client last week, and in the course of the sales conversation we discussed and agreed on the costs and payment terms. I issued the first invoice the next day, and it was paid immediately as we had agreed.
Now that’s someone whose values are in alignment with mine, and I have no doubt that we’ll never have a conversation about an outstanding invoice.
The challenge is in identifying whether your values are aligned.
I heard last night of an employer who interviews potential employees with a lengthy discussion around their values. They provide a list of values and ask the candidate to circle a number of them and to identify their top 3. Then they ask questions about those values and how they implement them in their life.
I think something similar could well be applied to discussions with potential clients or customers.
When you have values that are aligned, assuming integrity is one of your values, you’ll find that your customers or clients will pay their invoices on time, or if they can’t they’ll let you know in advance and have the conversation with you about when they expect to pay and regularly update you with how their going.
This, along with written terms and conditions, are key to getting your cash in, in a timely manner.
“The opinions expressed by Smallville Contributors are their own, not those of www.smallville.com.au"
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