What's a Leader to do with "Worst-Paying Customers?"

Posted by: Jonena Relth, President and Leadership Evangelist

Perhaps you're among the thousands of small business owners like me who have noticed the phenomena below - - our biggest and best customers are now falling way behind in paying us.  These are huge companies with lots of clout who are using vendors as their "bank" while cracking down hard if their customers are even a day late. The article below is spot on and I thought you might like to read Ms Azara's advice for keeping your customers while trying to get them to pay you what they owe.

I'd like to hear from my readers on this.  On average, how much longer are you waiting to be paid these days?  How much pressure are you putting on your customers right now to pay you?  How are they responding to your collection calls? How much "RISK" are you willing to take to pressure your customers to pay you?

"Alert: The new worst-paying customers"

"Beware! There are two types of customers who may be falling into the “slow pay” category. And they’re the last ones you’d suspect.
 
Now’s the time to talk to your CFO and Accounts Receivable manager to see if they’ve noticed this troublesome trend: Many companies in all industries are now reporting major payment slowdowns from two critical groups:

• their biggest customers, and
• their “best” customers.

Not something any company can afford right about now. And each group warrants a different approach to stop this in its tracks.

1. Big customers

Any companies that have large firms in their customer database will need to devote some extra time and attention to these accounts.
 
The biggest of the big companies are taking 5% longer to pay their suppliers than they did a year ago. That’s from experts out of REL Consultancy.

The kicker: These same businesses are cranking up their collections efforts to boost their own cash flow.  Turnabout is fair play here. True some mega-customers tend to call their own shots. But it doesn’t mean your business is powerless over your cash position.
 
You can do everything from simply highlighting payment terms on the next invoice and calling a few days before payment is due to adding finance charges to the bills (if your contract allows for them).

2. Best customers

Of course you don’t want to get walked on, but you don’t want to risk losing customers, either. Especially if accounts have been good payers until now. More and more companies are telling us that even their most reliable customers are now having trouble meeting due dates.

Make sure credit and collections people aren’t taking too hard a line. The key: That  finance staffers are empowered to be flexible in how they structure payment arrangements with these particular past dues. You have a slew of options that your finance chief can offer.

After all, they were your best customers for a reason, and they probably will be again when the economy stabilizes."

March 10, 2010 by Jennifer Azara

http://www.businessbrief.com/alert-the-new-worst-paying-customers/