Getting paid. If you’re in business, this is definitely something you think about. Yet no-one really talks about it. Good sales processes will help you to get paid, without detracting from your client relationships. There’s no need to be desperate like Jerry Maguire (if you need reminding about this great movie from the 1990’s – watch Tom Cruise in the famous ‘Show Me the Money!’ scene here). You and your business really can have positive and profitable client relationships.
As salespeople and/or business owners, it’s our job to move the needle for the businesses we represent, to form good client relationships, close deals, hit targets and make quota. This activity results in money moving from one business bank account to another. This means getting paid.
One of the most topical articles on the internet last week was written by David Cormack of Draper Cormack Group, a Wellington-based PR and communications business. David wrote in The Spinoff about the challenges that SME’s, particularly the smaller businesses, can often face in getting their invoices paid. In our interconnected world, when one business is challenged, this can have a flow-on effect across our entire business community.
I vividly remember the first time I was personally impacted by a client not paying. It was my first full-time sales role, selling advertising space for the late, great Capital Times newspaper. Yes, we are talking last century! I was keen as mustard but also green as grass. As a commission-only rep, if the client didn’t pay for their advertising, I didn’t get paid. One client did not pay his invoice for two months or more.
‘Ring him up yourself and get him to pay!’ said my manager.
Ouch! None of us likes making those type of calls. Sales is all about creating a win-win with happy clients and everything going well. How stressful to have to call this man and talk about a late payment!
During the telephone call, I tried to diffuse the situation with a bit of humour.
‘Look, I could be facing a winter stuck in a Parisienne garret!’ I said.
‘Well it might not be so bad’, said the client. ‘It all depends who you’re stuck with!’
His response surprised me. Would he have said that to a man? Probably not, but then in the early 1990’s we didn’t really question as much as we do now. I quickly ended the call. Thankfully he paid soon after.
It’s 2018. We’ve come a long way. Email, automation, software like Xero and all its add-ons – here to take the pain out of managing your business and your accounting.
So, what do you do, especially as a SME, if you’re waiting for an invoice to be paid? We’re not talking about being a few days late – the timeframe that David Cormack wrote about is 60 days or more.
Short of doing a Jerry Maguire – it can be hard to know exactly what to do in this situation.
With any business challenge there are always three options:
- Decide that you’re happy enough and do nothing
- Decide that you’re not happy, but that it is it too hard to do anything
- Decide that you’re not happy and that you’ll find a win-win way to create change
If you’ve read this far, I assume you’re in the third category.
Sales Processes are an important place to start. As part of our service, Magnify helps clients to look at their sales processes, so essentially, we’re talking about money and how to grow it for a good part of the day.
Everyone in your sales team, whether your team is large or small, needs to get comfortable talking about money. This doesn’t have to be difficult – get further sales training if necessary.
Here are some steps that you can take to encourage payment for your business efforts:
- Maintain positive client relationships. This is the best way to ensure your invoices are paid. Clients are people, and people like to be appreciated. Treasure and appreciate your clients. Keep them updated on helpful information, catch up with them, thank them. Your business relationship ultimately pivots on two people committing to work together. Get back to the heart of this to grow a solid base for your client relationships.
- Be confident in the value you provide when talking with clients. If you’re confident in the value of your product or service, this will help you to stay calm if someone challenges your pricing. As the famous Warren Buffet says – Price is what you pay, value is what you get. So – understand their client needs, demonstrate your value, and then stand confidently in the knowledge that you help your clients to solve their business challenges. This attitude alone will help clients to respect their opportunity to partner with you.
- Watch your language. If you’re finding it hard to talk about payments with clients, change your language. Rather than talk about getting paid, talk about the investment that the client is making and the value that you will deliver to them. You still need to talk about the financial amounts. However, instead of saying ‘You will need to pay $xxx’, say something like ‘Your investment of $xxx will result in …’. You’ve still told them the cost, but in a much nicer way.
- Have a contract that you and the client both sign, which includes details about the payment terms. This doesn’t mean that you’re not friends or that you don’t trust each other. Contracts help us to set appropriate boundaries, to understand how we will operate in any given situation. They provide clarity and a solid base for respect to grow. Having a properly prepared contract by a qualified lawyer also showcases your professionalism. If you’re a smaller business, check out Simmonds Stewart or LawHawk for contract preparation options that won’t break your bank.
- Sort out your sales processes. In the beginning of any client relationship, we’re setting the stage for how we will go forward together. Do you give potential clients the opportunity to respond to anything before you close a sale? This could be a signed contract, an email, a survey from your website, or a questionnaire, perhaps even samples of previous work. Be careful if you’re carrying too much of the relationship momentum, or doing everything. We can think that we’re making it easy for the client to do business with us, but inadvertently end up with one-way client relationships. The best work happens when we partner with our clients. Design a sales process which requires the client to do something at various points. This will help create more customer buy-in, and increase your likelihood of getting paid.
- Make it easy for your clients to pay you. Think carefully about your process of gaining new business, preparing invoices, sending invoices, sending receipts. Is it simple, is it regular, is it predictable? Make it as easy and predictable as you can so that your clients know what to expect and when.
- Re-design your payment model. There are many ways to set up payments. Ask for payment upfront, or at least a deposit. Law firms are particularly good at this. They will often ask for a sizeable deposit which they put into their trust account. They never sound nervous when telling clients. It’s just a simple fact – this is how they do business. If you believe in the value they have demonstrated, you will agree to work within these parameters. You can also encourage clients to set up automatic payments. Take a lesson from power companies who often offer a discount for a prompt payment. Or perhaps negotiate a better rate for clients who commit long-term and pay on time. What about using a retainer model? There are many ways to structure your payments systems so that you ensure you get invoices paid.
- Get a good accountant. Yes, there’s nothing like a real person on your side, but also in your ear, to help keep you on the straight and narrow with your business finances. Invite accountability. Most accounting firms can design you a package if you’d like to have your accounts done more regularly. This regular contact will help you to focus on the importance of getting your invoices paid on time, and your accountant will probably have tips that help you very specifically.
- Re-think your client relationship. If your possible new client won’t get their documentation in to you, won’t sign a contract, can’t even reply to an email – you need to ask yourself if you really want to work with them. If they can’t reply to an email, how will they manage to sort out their invoice? You need their full customer buy-in to enable you to truly partner with them and do your best work. It’s as simple as that.
- Think strategically about your client base. If you’re a business owner facing invoices paid via a 60-day cycle, you have a challenge. Accounting cycles for large businesses are unlikely to be changed for one supplier. If you can’t afford to walk away from this customer, develop a strategy to grow your base of smaller customers, with whom you can start a fresh business relationship. Having a range of customers helps to alleviate cashflow challenges. As this new customer base grows, you may choose to re-think your business relationship with that large customer. Or you may find that your varied client base sorts everything nicely.
If you need help to brainstorm your best solution to these or any other sales challenges, contact us. We’re always up for a chat and a coffee. Your best solution could be closer than you think.