Lessons for Adversity
4. Remember to get paid.
Many companies put extra pressure on themselves and get into trouble because they extend too much credit to their customers. Unless you are bank, don’t act like one. Collect on your invoices immediately. Money shows respect. When people pay us for our products or services it tells that they value and respect what we did for them. Get paid or get rid of them as customers. Only work with those who appreciate you.
Despite the harsh environment I work in, I live by this credo. All of my clients are out of cash and their credit is maxed out the very first day I start working with them. Do you think I extend credit terms to them? Nope. I have a clear policy; my invoice for the previous week is delivered on Wednesday, I am paid by Friday…or, I don’t show up on Monday. I really don’t. I don’t care how far underwater you are, if you are serious about saving your business and you respect me and my work—pay me.
And, everyone who works for me lives by this same policy. I add one extra condition for them so they help ensure that we get paid in a timely manner. It’s quite simple: If I don’t get paid, you don’t get paid. This way, it’s a team effort. In 20 years of working in distressed financial environments, there is only ONE invoice that I was unable to collect.
Task: Go through your account receivables. Line by line. Start making phone calls. You may hear every excuse in the world why they can’t pay. They may cry, they may yell at you, they may threaten to never work with you again, they may rationalize why they shouldn’t pay you in full—who cares? Be firm, be clear, and don’t be afraid. You provided a service or a product, they benefited from it—you deserve to get paid.
Some will want discounts—don’t do it. Discounts cheapen your company. Offer a discount only if you are desperate. Only if you absolutely need that cash today. A better option is just to take partial payments. If you’re stuck and they’re stuck too, have them give you “something” each week as an act of good faith. Do not let those receivables sit there without any regular pay down. They will eventually become dust, as will you.