In order to have a successful business, profitability is critical, but most important is converting your billings/accounts receivable as quickly as possible into cash receipts.
This evolution does not just happen. It should begin from the initial point of sales prospecting and throughout the successful sales cycle and the client on-boarding process.
Sales prospecting needs to incorporate an evaluation of the prospects market presence, existence, viability, synergies and partnership potential. Within this process you will determine the prospective clients’ standing within the business community and its viability to sustain and grow its presence.
Each new prospect provides risk, and minimizing this risk will be critical to the successful partnership you will have with this customer. Some examples of risk can be in failing to meet service commitments, insurance liability, fraud, insolvency, etc. As your sales cycle matures and the prospects become potential clients and conversations lead to commitments, importance needs to be centered on clearly defining ALL the terms of the relationship. Collection terms need to be agreed upon.
Setting clear and honest expectations on all levels of service and interaction of both parties will lay the foundation for a long, profitable and cash-rewarding relationship. These conversations may require you to modify your existing client on-boarding process and have key executives within your company develop relationships with the prospect.
Each service level within your company needs to be in alignment with the objectives to the arrangement and each of these commitments should be part of your final agreement with your client. As this article is titled, payment terms are key to the relationship, so a clear commitment and understanding is critical to both parties and need to be documented in the final signed agreement.
Nobody likes surprises, so don’t be afraid to talk about collection expectations! In the end, everyone will appreciate that you took the time to do so.