The best of intentions won’t pay the bills
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Business relies on trust. You can sign contracts and create agreements, but it ultimately comes down to the will of both parties to stick to a mutual understanding and behave in a fair and reasonable manner in good times and bad.
I have recently been exposed to the liquidation of a customer – albeit a relatively small one. While good intentions are important, they only go so far; payment is crucial. No one enters business to face collapse. Liquidation is a last resort, taken when all other options have been exhausted. But, ultimately, the money owed should be showing in my account.
The experience has underscored the importance of cash flow; it is the lifeblood of our businesses, regardless of their size. The funds I am likely to lose due to this liquidation could have been used for other expenditures, contributing to the cash flow of the businesses I engage with.
Often, one hears of a company cutting it too close with its payments to suppliers, treating this as a fallback funding method, without considering how crucial the cash flow is for the supplier.
Relying on the ‘generosity’ of suppliers beyond standard trading terms reflects poorly on any operation, raising concerns about a business’s integrity and the trust I mentioned earlier. Suppliers may be hesitant to apply too much pressure to collect debts, fearing it might jeopardise the customer relationship, although arguably, there’s not much to lose if you’re not being paid for your services in the first place.
It begs me to ask the tough question: Are we all being fair and reasonable corporate citizens and making our greatest endeavours to prioritise and ensure we’re playing our part in the relationship?
In my recent experience, the liquidation process was further complicated by a complete lack of communication from the customer. This resulted in significant legal costs, all just to reach a resolution after we had exhausted other options. Could a straightforward conversation have made things easier and saved a considerable amount of expense? Absolutely.
As economic conditions continue to tighten their grip and anticipated seasonal boosts in volume fail to materialise, I ask all of you to reflect on whether you’re being the best customer possible – displaying the trust needed to foster thriving commerce.
Unfortunately, I fear there will be a few businesses out there reaching the end of their resources, still holding on with the best intentions – whether at their desk, kitchen counter or in the cab of their truck – determined to give it ‘just one more week’.
The problem is that good intentions won’t pay the bills.
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