Australian Travel

Many small businesses spend far too much time on debt collection rather than their core business. Over the last 2-3 months I’ve noticed an increasing lag in payment cycles.

If you are in any sort of operation that uses small businesses as service providers or product suppliers it’s well worth your while to pay your bills on time and completely ignore to some “clever” accountants mantra of not paying until the second reminder. Guess what? People are human and they will pay back and pay forward. One way or the other you will pay in the end for screwing around your suppliers.

Here’s why:

1. If you pay on time you will get much better service. I know with my clients, the one’s who pay on time or early get the best service, day or night 365 days per year. These are A-Class clients. They pay on time or early, don’t bitch about the price, and as a result get excellent service and great value for money. They respect me, and I respect them. We both win.

2. If you don’t pay on time you reputation is on the line. Small business owners love to gossip. They slag off any customers who pay late. And with the Internet so freely available, your reputation can become crap overnight with one blog post. This leads into …

3. If you don’t pay on time, you can end up paying a premium. The current cost of money is about 1.5% per month. If your payment reputation is shite, than expect to pay at least 10-15 % more than if it were good or unknown. In some cases bad payers can be locked out of they supply chain completely and have to spend enormous amounts of time to find a new supplier.

With existing suppliers, if you screw them around, they will either add 10% to their next quote, or refer you to a lower-class competitor - hoping to send them broke because you don’t pay when due.

4. If you pay on time your staff don’t get harassed by debt collectors from your supplier’s accounts departments. This is a big source of staff burn-out. If you pay on time your staff won’t have to make up excuses for late payment and may actually start to enjoy their jobs.

In summary, if you want good service, good products, happier staff and ongoing loyalty, pay on time or before time and ignore your accountant’s advice.

What do you think? Why do you like early payment or not?

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