The New Financial Year - July 1, 2012
According to adult learning theory, there are two critical stages in which adults learn. First, adults learn at the initial exposure to a subject or situation. Secondly, to change an adult's previous learning, they will have to go through an event which breaks or challenges their perception of what has already been learnt.
The business world is no different in providing adult learning situations as your business interacts with its customers throughout the year. These learning situations are opportunities for you to re-engage with your customer so they learn how to improve their payment habits.
Doing Business With Your Business The First Time.
Adults learn about how you do business, on their first introduction to your business, whether that be in person or by visiting your website.
We know what the customer sees on the first occasion is critical. Marketing and sales people work very hard to make the customer's first experience, a positive experience from the sales perspective. However, we also know there is little emphasis on how important it is that your business be paid on this first occasion.
Here are three basic examples of how a business might have dealt with new customers the first time, whilst not highlighting the importance of being paid.
1 The salespeople do deals on basic order forms or pads without any information regarding the business's payment terms and conditions. Sometimes there is not even a space for the purchase order number or customer signatures to confirm the order details, just accepted.
2 There is no follow up for outstanding invoices within 2-3 days of the payment NOT being made.
3 The customer inds that enquiries about missing invoices, incorrect details and other issues, are not dealt with any form of urgency.
If these issues are not managed, the new customer will see that their supplier does not really seem to care about how and when it is paid.
Doing Repeat Business After a Major Change.
The change of the financial year and the end of the calendar year, are two major events in the commercial world. After each date, there is a new period available to start again or reinforce how you would like to be paid. However, you can only take advantage of these opportunities if you have prepared for them properly.
I strongly suggest, in most businesses, marketing, sales initiatives, products, services or prices are changed at these times. However, have you prepared for any changes in how your business will get paid? I suggest in most cases, you have not!
Here are four basic strategies you can review for any upcoming end of period change. These strategies are designed to change the way your customer learns how important it is, that your business be paid.
1 Prepare new sales documentation with details about trading and payment terms clearly shown on the order pads or the order form on your website.
2 Train your salespeople to sell the payment terms as well as the product and services.
3 Let customers know, how important being paid is to your business, through positive advertising, providing contact details and adding resources required to help with customer enquiries in a speedy manner.
4 Pick up the telephone or arrange meetings with your customers and TALK WITH THEM about how you can do more, or better business together.
Most slow paying customers pay slowly and have developed these habits because of the way YOUR business dealt with them the first time. These slow payments will continue until YOUR business finds a way of breaking the customer's slow payment habits through another learning event.
The new financial year is one such event or opportunity where your business can use adult learning theories to better implement changes that are required to increase your cashflow. However you do need to start your planning now.