Money Minute – The Perfect Customer

Money Minute – The Perfect Customer

Today’s challenging economic climate means that competition is fierce; businesses are working harder and harder to get new clients on board.  It can be tempting to make a sale at any cost but how can we ensure the clients we get on board will actually be good for business?

The “perfect customer” is not necessarily the one placing the biggest order.  Regardless of the market in which you operate, your dream customer:

  • is financially stable
  • accepts your payment terms
  • pays on time

and, therefore, represents a low risk to you.

We can all reduce the worry of quoting for new business and avoid cash flow problems by asking the following key questions:

  • Am I agreeing significantly longer payment terms with my clients than I am with my suppliers?  If so, who has the most reasonable terms and whose do I need to change?
  • Is the service or product customized for the client or significant in size?  Could it be appropriate to request a down-payment or payment against proforma invoice?
  • Am I happy to take a risk with this client or should I check them out before agreeing the sale?

Remember: a sale is not a sale until the invoice is paid!

  

Case Study

A company that specialised in road safety won a very large deal with a local council.  In the small print, they had specified 30% of the fee up-front, with 30 day terms but the purchase order arrived with the client’s standard terms – no up-front fee and 60 day terms.  In the meantime, the vendor had bought in additional equipment and hired engineers and the best the account manager was able to do was to renegotiate the payment terms to 45 days. The result was that it took well over 50 days to get payment, cash was tied up paying for the engineers and the equipment and the company nearly went out of business.

The company should have highlighted the payment terms clearly and asked for them to be put on the purchase order.

 

Company Checks at a Glance

Checking out potential new clients is easy and can be done online – results come back within minutes.  Basic checks on companies hours are free, financial reports are available online at a very reasonable cost.

 

 

 

Quote 

 “A wise man will make more opportunities than he finds”,    Sir Frances Bacon

 

A Number 10 Petition

Please join me in signing up to CCR Magazine’s Number 10 Petition to call on the government to offer its support to the Credit and Collections industry and to encourage consumers to reject the debt avoidance culture, something that results in higher prices for everybody.

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