Hi everyone! So there I was last week, sitting nervously in the waiting room at the head office of an international clothing chain in Brisbane. This company is a house-hold name, famous for making sporting apparel, rugby jerseys etc. I had finally managed to get the CFO to meet with me to discuss debt collection, after hearing that they currently didn’t use an external agency. Dollar signs had replaced my eyeballs as I thought of the huge amount of debtors they surely would have. Imagine then my surprise when I was told I had wasted my time- the reason they didn’t have a debt collector was because they didn’t have any debts! None. Nada. “So you’re a COD business then?” I asked. “No”, he said. “We have accounts, thousands of 30 day accounts, they just all pay on time, every time”. Now this dude was either God in an all blacks jersey, or he was simply the greatest CFO that ever lived. But it was neither- their secret was that their screening process for new account customers was so stringent, so robust and so diligent that they were able to stop a bad debt before it even started. Their sales team was trained to listen out for and identify risk by using a list of common warning signs that would indicate the customer may have trouble paying on time if given an account. If so, they were put on COD. Simple, brilliant strategy. One, however, that couldn’t surely translate to small business land. This company had the luxury of being a massive corporation, more important to the customer than the customer is to them. Us small guys aren’t so lucky unfortunately, but then I thought that surely the principles of this approach could work for us. So as of last week, I am on a crusade to teach SME’s the warning signs to look out for, and I am going to use real life examples and an interview process to do so. Any willing clients of mine who we have collected money for will asked to share their experience, and with the benefit of hindsight we should be able to build a list of warning signs to look out for, before it is too late. If you have had to chase a customer for payment this year and would like to share your story, please shout out! Cheers
How to prevent a bad debt