As the old saying goes, “nice guys finish last”; however, when it comes to cash flow, sometimes being the nice guy means you go out of business and never get to accomplish the dream of building your own profitable business and retiring comfortably.
Acquiring customers is hard work, and deciding to extend terms to pay at a later date can be a good way of differentiating yourself from your competitors. Keeping customers is equally hard unless you sell a highly specialized product or famous luxury brand item. It is no wonder then that business owners and financial executives are slow to begin collection action against a customer for fear of losing that client they work so hard to get. In many cases, internal credit staff does not have the time nor resources to follow up with your slow-paying customers adequately. Most accounting or internal business systems are terrible at aiding your credit or accounting staff to follow up with your customers promptly.
To fully appreciate the magnitude of your situation, you must understand what your net margin (profit margin) is and how it relates to your specific situation. As an example, let us assume your net margin is 5%. Your customer owes you $70000, and gossip in your industry suggests your customer is having significant financial trouble. If your customer goes out of business, it will take 1.4 million dollars of new sales to replace the lost revenue of $70000!
At this point, you have two choices to recover your money:
1) pay a reasonable fee to a collection agency and hopefully get most of your money back; or,
2) quickly sell 1.4 million dollars of new products or services to make up for your loss.
There is a 3rd option.
Provide your staff with the tools and automation that would allow them to collect your money and detect issues much earlier, through decisive action. PCM PRO is a “software as a service” monthly subscription of professional debt collection agency tools that seamlessly connects to your accounting system (QuickBooks, Sage 50, Microsoft Dynamics, etc) to automate the follow-up and collection process. Gain the leverage of our name and highly sophisticated systems. PCM PRO allows you to collect your own money and hopefully, salvage the relationship with your customer.