Although it is a faint memory, the 4th quarter of 2007 has left its skeletons. If you don’t think it has, sit back and peruse your aged receivables. You know those skeletons, they are sitting there, now better than 120 days old. They amount to a river of broken dreams. In the back of your mind, the words of that partner still ring clear, “I am almost reasonably positive the money will come in by December 31st”. While they were being uttered you hung onto every syllable, for that meant the difference making the target or missing the target.
Now as you reflect on those hectic times, you can see where things started to brew into the train wreck 2007 had become. I have already written about the moderate growth that some firms experienced in 2007. Well if you are up-to-date on your reading, you would have caught the February 25th
Over the past few weeks I shared with you many of the mantra held by the corporate world when it comes to collections. Now more than ever it is time to take heed, otherwise the 2007 train wreck of year-end will pale in comparison to that you will experience in 2008! My recommendations now are get yourself a subscription to Business Credit and learn what your corporate counterparts have known for years.
With Business Credit tucked under your arm and a plethora of caustic blog entries, you may be well suited for the recessionary jungle of 2008. My secret for you is...I perceive that the global economy will begin to see a recessionary reprieve in 2010! However, with that said, and the plans in place – best of luck! Keep in mind that many are vying for your client’s less than stellar cash flow. Make sure your bills are at the top of their list.
Now that your processes are in place to have stellar collections in 2008, there are those legendary receivables. Those that have been around as most office furniture or the first service patch of Windows 2000. At some point, you need to come to the realization that unlike wine, receivables don’t mellow and get paid with age. Instead, the client becomes more calcified and less likely to make concessions. Although calcification is an interesting phenomenon, there is something even grander – the statute of limitations and the Fair Credit and Collections Act. All I can say is make the move to collect on something where the statue has run out and you should consider yourself lucky if you are able to walk away with just an earful of profanity. Instead, you should consider a “Don-ism”. For anyone who has worked with me enough you will know the phrase.
“You derive no benefit in life by proving someone else wrong”
Remember, in collecting receivables you can only state your case so many times and in so many ways; if the client doesn’t move then you need to. Imagine the surprise when I saw that Susan Raush, a corporate credit manager who authored Best Practices: Collections, have the same mantra. Her statement goes as follows:
“When you have a legitimate dispute, you need to weigh the costs against the benefits of continuing the dispute. Sometimes it just isn’t worth it to be ‘right’ and you have to graciously give in to the customer’s demands in the name of goodwill and future profits.”
When the time comes, and you know it has for many of your receivables, you simply need to learn from the experience and walk away. Not walk away in the light of one day the payment will materialize. But rather, do three things: internalize why the receivable never got paid, put in safeguards to prevent it from happening again, and the hardest thing – write it off! When you write it off, it will be like a “therapeutic cleansing”; a rebirth of your purpose in managing receivables!
Managing receivables is probably the most difficult role in an organization. It is important to know when you have done all you can and when to simply walk away. I have learned everything has a beginning, middle and an end. It is important to know where on the continuum you are. Know when you have reached the end, clean up the skeletons and bow out gracefully. Always remember, as you exit the stage, all what you have learned. Most importantly, repeat successes not failures!