That’s an ugly phrase, isn’t it? No one wants to be a deadbeat, and businesses certainly don’t want deadbeat clients. Still, almost all companies today that are not point-of-sale enterprises have a higher percentage of overdue accounts than 5 years ago.
As the recession deepened, receivables went out longer and longer. Now, as the economy begins to recover, businesses report that rather than paying those overdue bills, their clients with large balances are using that money to invest in expansion or new equipment. Staff members making collection calls are told, “If I pay your bill, we’ll be out of business—just let us get ahead a bit and you’ll get your money.”
At Tembua, we have the same problems. We are aware that our translated pieces are absolutely necessary for companies to move ahead with their marketing and staff development, and we are, perhaps, a bit too understanding about financial trouble. As CEO I have learned to always make a collection call an opportunity to keep the customer relationship going and generate more business. That has been our policy for many years: Keep the customer if at all possible.
A few months ago I was lamenting to another businesswoman that our receivables were at an all-time high and that I was so grateful we had built reserves for just such a case. I expected agreement, a nod of understanding, commiseration. Instead, she looked at me and sternly said, “Do you realize how unfair it is to your staff to let that continue?” Before I could answer, she went on to lecture me about how the cash flow difficulties that surely follow growing receivables threaten the life of our business. That’s Finance 101, of course, but she extended the principle to the people who work for us. She talked about the mortgages and college tuition and car payments that our paychecks cover every month. “How can you think so little of those families by not demanding the client payments you need to pay salaries?”
I stood silent in front of her for a few moments. Obviously, I understand how important the jobs are to each family, but I had never considered that I actually put those families at risk with our relaxed collections philosophy.
That afternoon, my attitude changed. I had been concerned about driving a business into bankruptcy by demanding payment. I now understand more clearly that my primary responsibility is to my staff. Not only do I need to provide them with adequate training, up-to-date equipment, a comfortable workplace, and incentives to succeed, but I also need to guard more carefully the cash flow from which their salaries come.