“My idea of housework is to sweep the room with a glance.” —Erma Bombeck
What happens when you clean your home from top to bottom in the spring – wash windows, floors, woodwork? Well, if you are like me, you feel re-energized and focused. The opposite is true if I just dust off the winter, and simply skim the surface instead of digging deep – I have the nagging sense of an unfinished job, and must work at putting it out of my mind. I know I did not do the whole job, I know the dirt is there, and I know it won’t go away.
We all procrastinate. Procrastinating on your spring cleaning may simply result in failing the white glove test. On the other hand, waiting too long to deal with the money owed you for the goods or services you provided can be very unhealthy for your business.
I hear small business owners tell me all the time that they are too busy running their businesses to focus on their past due receivables. The “dirty little secret” is that delinquent receivables rarely collect themselves.
`I once met with a business owner who had close to 350,000 in uncollected receivables. He had extended credit to all his customers and many had never paid him anything. He was a good man with a good heart who really believed that sooner or later, people would do the right thing and pay him. A few even did!
However, when I looked at the entirety of his receivables, I immediately realized that a great deal of what he was carrying around was out of statute – over six years old, and basically uncollectible. I remember the look on his face when I told him that he had essentially lost any opportunity to collect over a third of what he had on his books, simply because he had waited too long.
The business owner, now a customer, immediately resolved to refocus his efforts on keeping his receivables clean. He assigned a staff member to keep track of all receivables. He let all his customers know his payment terms, in writing. He began to offer discounts for prompt payment, and had a follow up procedure for all late payments.
We did manage to help this customer recover some old items. But more importantly we could help him see the importance and benefit of an ongoing focus on his receivables.
The bad news is that even the best spring cleaning will get dirty again soon. The good news is that with a consistent effort, your receivables can stay clean indefinitely!