Small Business Cash Flow Management: Meet Susie

by Dawn Fotopulos on November 8, 2011

In this series on small business cash flow management, we’ll show you how to ensure you get paid for all your hard work.  Don’t assume just because you finished a project and delivered brilliantly for a client you’ll get paid.

No one else online is talking about this stuff and it can make the difference between your small business thriving or closing its doors. In a recession, there are lots of reasons suppliers don’t collect 100% on their invoices. Sometimes customers go bankrupt and they can’t pay.

Sometimes customers play the waiting game by paying in sixty days, not the usual thirty days.  Sometimes clients will pay the discount even though they didn’t earn it and challenge you to collect the balance.

This series on small business cash flow management offers some strategies to help ensure you get fully paid as your invoice comes due.

Small business cash flow management tip #1: Make sure you meet Susie.

Who’s Susie? She’s the accounts payable clerk at the client.

She’s the one who cuts the checks at the end of the month.

Susie is probably the most under-appreciated, underpaid person at the client, yet she holds the “keys to the kingdom” for you.

She manages the cash position at the client and she determines who gets paid, how much they get paid, and when they get paid.

Most small business owners spend a lot of time building relationships with the people at the client who sign the purchase orders. You need to do that.

The purchase order drives your revenues. That’s the “front end” of the business cycle. You must manage the “back end” of the business cycle too; getting paid.

Introduce yourself to the accounts payable clerk. Few small business owners do this. They assume once their invoice is in the system at the client they’ll get paid. Wrong assumption.

First, there’s a “pecking order” in which suppliers get paid first. The suppliers that drive the client’s revenues get paid first. Always.

Why? Without a steady stream of product or service, the client’s business suffers, so that supplier’s invoices are always paid first.

Second, it’s common that large invoices, usually over $5,000, need additional approvals from senior management to get paid. That means a $5,000 invoice will always take longer to get paid, even if the invoice requires payment in 30 days.

Third, most small business owners have no idea what the payment policies are at the client and don’t negotiate that upfront when the purchase order is signed.

Find out who Susie is. Go shake her hand. No one ever does that.

When she sends you a check for payment, send her a handwritten “thank you” note and send it snail mail.

No, I’m not kidding. Take the time. Heaven will open and the angels will start singing when she receives it.

Why? Because no one but you appreciates how important Susie is to your business. You will be communicating that you know her value.

Susie never gets a “thank you”. Everyone takes her for granted. You won’t make that same mistake.

You might even consider sending Susie some chocolates on her birthday. Or how about taking her out for lunch twice a year? Ask her “so how’s it going?”

You’ll be amazed at what you’ll learn.

Years ago, when I took the accounts payable clerk at a client out for coffee, I learned the client was about to go bankrupt (and about to default on paying my bill) .

I respectfully ended my professional relationship with that client on advanced warning, and avoided a $20,000 write-off.

A $20,000 write-off was a ton of money for my business at that time.

Whew. It was close. The accounts payable clerk was honest and I was able to do some risk management before everything hit the you-know-what.

The payable clerk was honest because I had already built a trust relationship with him.

Small business cash flow management will always be dependent on when your invoices get paid. The objective is to become a payment priority, even if you don’t do large volume with the client.

One supplier lost his house because a client never paid him. The stakes are very high in a recession.

Make sure you meet Susie and nurture that relationship so she becomes a collaborator with you.

When she sees your invoice, you won’t be a stranger to her.

The idea in small business cash flow mangement is you demonstrate your appreciation for the accounts payable clerk’s knowledge and role.

If you do this, guess whose invoices will be paid first every month?

From a small business cash flow management standpoint, there’s no better way to manage future cash flows than to get to know Susie.

If you follow the steps above, you’ll find you won’t have to work quite so hard to keep your business flourishing.

Remember, it’s not just about sales, it’s about getting paid for those sales. That’s what small business cash flow management is designed to optimize.

Cash flow is why you’re in business.

Don’t know what “cash flow”  “accounts payable” or “accounts receivables” are?

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Go here for more small business tips — cash flow management.



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