Collecting money from your customers is a big deal? Getting paid on time is a big deal.  Because cash guarantees your survival week after week. No cash, no business. The lights will not be on, the door will not be open.

This week’s episode of I Hate Numbers is all about getting paid on time. I look at

• Why getting paid on time is a big deal
• Three things you do to help getting paid on time
• Practical tips to share

Getting paid on time

Cash ultimately comes from your customers. They give you money for your products and services.

Your business has financial commitments. Make sure your staff, suppliers, lenders, and YOU get paid. But, get paid with cash , not buttons and promises. To clarify, if you don’t have access to cash, then your business won’t have a long shelf life and you’re screwed!

In other words, your cash should come from your customers.

Three things you need

In addition there are 3 essentials things you need to help get paid on time, summarised as CULTURE TECHNOLOGY and ACTION, CTA for short.

CULTURE

Firstly, culture equals mindset & attitude. Know how to deal with money. In other words, your mindset dial should be set to having grown up business conversations. Grown up doesn't mean being nasty, it means being comfortable talking about money.

Giving credit is always a risk. The risk is you don't get paid ! You must have the right attitude to manage that risk. But your business is just that, a business. It’s not a hobby, it’s there to make you money (profit) so you can continue to do what you do, make a difference, serve your customers and give yourself a decent personal and family life.

Most importantly, listen to find out more.

TECHNOLOGY

Certainly, technology is a good friend to you in terms of processes and systems. For example, technology helps you issue customer quotes, invoices. Above all technology monitors what you are owed, reminds you when payments are late, and helps collect your cash.

In addition, technology is pretty cool for issuing agreements, terms, and conditions. To sum up, technology helps with the whole customer journey from stranger to getting paid.

Most importantly, listen to find out more.

ACTION

Thirdly, systems and processes are pointless unless you follow them and take action. For example, what do you do if the client doesn't pay you on time?

Action always wins over inertia. On the other hand, hiding under your duvet or putting your hands to your ears and going la la la is a playground activity. Definitely not suitable for your business.

Most importantly, listen to find out more.

Conclusion

In conclusion, Collecting money from your customers has to be done, and on time. Certainly if you want your business to still be around, get to grips with getting paid on time. Take control and improve your customer collection process. Contact us to find out more.

What Next

Make yourself comfortable. Sit back and listen.

Even better subscribe so you do not miss an episode.

 In This Episode

• Understanding why getting paid on time is vital for your business
• The part that culture plays in getting paid on time
• Why technology can be a good friend to you in getting customers to pay you
• Action speaks louder than words and inertia
• Developing your own Numbers confidence and decisions
• Take more control of your numbers to help make you money, survive and thrive

Links

https://podcasts.apple.com/podcast/proactiveresolutionss-podcast/id1500471288

https://play.google.com/music/m/I3pvpztpjvjw6yrw2kctmtyckam?t=I_Hate_Numbers

https://open.spotify.com/show/5lKjqgbYaxnIAoTeK0zins

https://www.stitcher.com/podcast/proactiveresolutionss-podcast

https://tunein.com/podcasts/Business–Economics-Podcasts/I-Hate-Numbers-p1298505/

You are listening to the I Hate Numbers Podcast with Mahmood Reza. The I Hate Numbers podcast mission is to help your business survive and thrive by you better understanding and connecting with your numbers. Number love and care is what it's about. Tune in every week. Now, here's your host, Mahmood Reza.

Getting paid on time is the topic of this week's I Hate Numbers podcast. In this week’s show, I'm going to talk about why getting paid on time is such a big deal, make such a positive difference for your business and for yourself. I'll give you a three-step framework about how we approach getting paid on time. If you want to dive deeper, learn more about getting paid on time, then check out the website.

Check out our guides on www.proactiveresolutions.com, and you'll find lots of cool, free stuff for you to use. Getting paid on time in your business is a big deal. Why is it a big deal? Ultimately, cash is the one commodity that guarantees your business will be here this week, next week, and the week after.

Cash is the commodity that makes sure that you can survive, and thrive, and grow. Without cash flowing through your business, then your business will not be able to sustain itself and you might as well close the lights on the way out of the building. Ultimately, it's your customers that pay for your business.

They reimburse you for the cost of running your business. They add and reimburse you and compensate you by way of profit, and they also contribute to rewarding yourself. Ultimately, the main cash flow should and does come from your customers. Cash is the lifeblood of your business and without cash, your business will not survive, let alone prosper.

Ultimately, customers generate the cash for your business to survive and thrive. So, that's a big deal. In your business, you will have commitments that you've got to pay for. You'll have utility bills. You'll have operating costs. You'll have the cost of your staff team, freelancers that you're using, bank loans to service.

You'll have overheads to pay out for. You've got to pay yourself. You'll have lots of demands on your bank balance. That cash should come from your customers. It may in a short term, have to come from borrowings, monies that you've built up. Any delays from your customers paying their bills has a negative impact on your ability to pay the bills and the cash that you've got to honor. That horrible feeling that we get when we don't have enough funds,

we don't have enough cash to pay our obligations, is not a very good one. There are three key building blocks required to getting paid on time, and I'm going to summarise this as CTA. So, I've knitted a marketing acronym, call to action, and I've used it in the context of getting paid on time. CTA in this context is culture, technology,

and action. Let me explain further what I mean by that CTA. Culture, to me, is about the mindset and the attitude you've got to how you deal with money. Now, I meet many entrepreneurs, many businesses that are fantastic at what they do. They deliver good value. They deliver good services. They're very good at customer engagement.

But when it comes to the subject of money, a different part of their brain kicks in and they find it very difficult to have those necessary and essential conversations about money. So, we think about that legal dopamine rush that we get when we actually bring a customer on board. We're delivering goods and services to our customers, and we are focusing on that part of the relationship.

The culture and attitude says that you've got to get to grips with the money side of things at the start of that process, not as the process begins. Now, you might be sitting there thinking, what do we mean by that exactly? So, if you bring a new customer on board, it's actually critical that you get your terms and conditions established at the outset.

So, when you agree the work that's going to be delivered, when you decide on the goods that are going to be distributed to your customer, make sure your customer is well aware of your terms and conditions i.e. how many days credit are you going to provide to them? When do you expect to get paid and what are the consequences?

Now, having said that, there's actually steps that you need to do before that phase. Giving a customer time to pay for the goods or services you are providing is a risk in your business. It may be a risk that you have to absorb, certainly if you're selling business to business, but it's a risk nevertheless.

So, we have to learn to manage that risk and we need to have the right attitude to it. So, we need to do our due diligence on that potential customer. You as a business owner have to make an assessment on the risk that you are taking by delivering goods and services on credit to that client, to that customer.

Now, we can assess the risk by doing what I call due diligence. What essentially you are doing here is making a judgment call based on whatever evidence you can collate on how much risk there is in you delivering goods and services to that customer. There are a number of ways that you can do this from referencing, credit checks. Come back to culture and attitude here, and you have in your mind to separate the personality of the individuals that you may be dealing with and the business relationship i.e. making sure that you get paid for whatever you are providing to that customer.

A couple of tips to share here. If it's a brand new customer, then it may be that you offer limited credit facilities, either in terms of how long you will give that customer to pay their bills. It may be the level of credit that you provide to them. So, instead of saying several thousand pounds, you might set the limit at a very low level, and then monitor and see how that relationship develops.

If they're prompt in paying, if they pay on time, then you may decide to relax those rules slightly more. You may take a deposit off that customer. One key thing though, underpinning all of this, you've absolutely got to make sure you get the agreement of what you're doing for the client, for the customer in writing.

Now, I don't mean a massive 30,000-page legal document here, but you need a clear framework summarising the work that you're going to be doing for the customer, your terms and conditions. What happens if something goes wrong? But you need to have a regulated agreement. It never ceases to amaze me how many businesses out there, many of longstanding, do not have any formality in the relationships they have with their customers and clients.

And relate formality is clarifying the scope of the work, but also clarifying terms and conditions about being paid. You may also wish, by the way, to insert personal guarantees. Certainly, the risk is much greater when you deal with companies, because if the company is unable to pay your bill and it suffers some financial distress, then you are largely going to be screwed.

So, having personal guarantees inserted in there may give you some extra level of protection. So, make sure you've got the right culture and the right attitude to how you deal with that. Get the T's and C's in there. If your attitude to discussing money with customers, with your clients is not quite there,

tf that level of comfort and ease isn't quite where you want it to be, then there's a couple of tips for you to take on board. Number one, get a separate email address, which you can label accounts @ whatever the name of your business is, and any official correspondence, quote unquote, is issued by that email address.

What that does, that separates in your own mind the you as delivering the work, you and your team doing the work for the customers and clients, delivering those products, selling in those services, and the more formality of an accounts team. You can use the one tip that I share with clients on a regular basis is, if you finding conversations difficult,

then always blame it on the accounting team. So, this is accounting policies and rules that I've got to implement, but ultimately you need to have the right culture, and for me, not getting paid on time is a massive kick in the teeth because, for me, there are certainly always good reasons why people may delay paying their bills, but ultimately, you've done your part of the bargaining.

And for me, it's a sign of disrespect. It might sound dramatic, but that's my personal feelings towards it. So, we talked about the culture, and that for me is a big plank of getting paid on time. The other couple of elements that I wish to discuss.The T part is technology, and technology helps us in a massive way in terms of managing what I call the credit-control function.

At the beginning of the podcast, I called it getting paid on time. Getting paid on time is just another way of expressing what we call the credit-control function. Credit control is all about managing the procedures and the systems and getting paid on time, and it goes from the start when you bring the customer on board to the final part when that customer actually pays you.

Let's talk about the T, the technology part. How does technology help us in getting paid in time? Technology can be used to issue the quotes to the customers outlining what we're offering the services, the value of that transaction at terms and conditions. That customer could agree that quotation and we can then convert and issue an invoice to our customer for that.

Technology can also be used to send out reminders to customers when bills are due. You know, a lot of us, many of us might be late in paying our bills, not through deliberation, but because we forget about it. But technology plays its part in reminding customers what's due. It can issue statements. It's a massive help to us in our businesses, especially with our busy, frenetic lives.

Technology is also used in terms of getting the payments from customers via electronic means, through credit-card facilities, bank facilities, stripe, PayPal to name but two, and we can link our systems to do that. So, it is a relatively smooth process in the background. We can focus on doing what we do and we can, relatively speaking, automate those processes.

This is all achieved by the powers of digital and cloud accounting. In my opinion, any business of, even of a very modest size needs to plug in to the digital scene. Episodes 10 and 11 of the podcast I Hate Numbers. There's some great insights there on digital accounting. If you don't want to invest in digital accounting, then you can use technology like Outlook, which gives you reminders in terms of when bills should be paid by your customers.

Monitor it, keep an eye on it, but you need to make sure you keep a careful eye on those customers who owe you money. A connection here also with the culture and the attitude. So, you do the work, you deliver the value, you invoice the customer, and part of that attitude is making sure that that invoice is generated and out the door the moment the work is completed.

If not right at that moment, pretty much within 24 hours of it being done. Customers count the time they owe you the money, not from when you've done the work, but when that invoice comes into their inbox, So, you need to have a really good, strong attitude and culture about work done, invoice out. Keep an eye what's owed to you, monitor it, and chase up.

I want to come to the last point here. So, we talked about culture. We talked about technology, the pass at place, in getting paid on time. The last thing is action, and by action I'm referring to what do you do if the client doesn't adhere to your terms and conditions? What do you do if the client doesn't pay you when they said they were going to pay you?

What do you do if the client and customer doesn't actually pay you on time? Well, passivity for me is not an option. You can't do an ostrich. You can't hide under the duvet. You need to do something, and I'm not necessarily talking baseball bats, and I'm not necessarily talking concrete mixers here, but you need to deal with the issue immediately.

So, that could be either sending a reminder email initially, nicely worded in the context of according to our records, your invoice doesn't seem to have been settled. We assume there's a glitch. Can you make sure it's settled on time? It may be that you actually make a phone call to that individual immediately, and again, very nicely.

There could be good reasons why the payment is delayed, but you need to deal with it if you give them 30 days. If it's 31, that's a day late. So, you need to act on it. And typically, I would look at this built in stages. So, the first reminder is a nice gentle reminder as it should be. Now, if the client ignores you, comes up with a dog ate my homework type excuse,

then you need to consider the next stages here. The longer you leave it to chase up a customer, the longer you leave it, and again, remember there could be perfectly good reasons why it's not done. You need to react to that situation here, and you can't just say, well, I'll give it another few days, there could be good reasons. Otherwise you should have said

35 days or 40 days. If you said 30, you need to reinforce, and that is actually a term that you're sticking to. So, follow it up. You can have a sequence of conversations with that client. The consequence of that conversation may be that you extend the credit terms more to that client. It may be that you agree a payment plan.

It may be the client has just forgotten. For whatever reason to, settle that account and they pay you on time. Ultimately, you've got to have an action plan. Now, the nuclear option is if the relationship is breaking down, they say, we're not going to pay you, and a whole manner of reasons are given for not paying you, then you need to decide what to do next.

So, to summarise, getting paid on time is a big deal. If you do not get paid on time, it has a negative knock-on effect to the survival of your business. Number two, CTA. It's the approach you need to getting paid on time. Culture, technology, and action. If you want to dig deeper, check out the www.proactiveresolutions.com site.

Check out the new section, the resources section, and if you feel that you want some help with your CTA, but I'd love to hear from you. In the meantime, folks, have a brilliant week and I look forward to your company on next week's show of I Hate Numbers. We hope you enjoyed this episode and appreciate you taking the time to listen to the show.

We hope you got some value. If you did, then we'd love it if you shared the episode. We look forward to you joining us next week for another I Hate Numbers episode.