Think of your clients as investments
From the minute you spend a dollar of your own money by providing your customers with goods or services, you are effectively investing your own money in their business. A good investment is one that makes you money and also helps to preserve your capital. So, make sure you are investing your money well. When you invest money in shares or property, you always take precautions to make sure your money is safe and the returns are right. And, so you should too when you invest in your customers’ business. After all, you protect your shares investments, so you should do the same thing when providing services and goods to your customers
Your chances of recovering that initial investment – and your profit – on a timely basis are usually pre-determined by the precautions you take before you invest your money, not after. It’s simple. The more effort you put in from the beginning, the less effort that will be required later on.
And the longer your money is tied up in your customers business, the less money that is going back into your own business. Cash flow is important. If your money isn’t going back into your business, it isn’t doing what it is supposed to do. Consequently, the less money you will be able to make. Time is money – either because it costs you interest, or it costs you opportunities that you have had to forego because your money is in the wrong hands.
Some wise words that are applicable even today
If getting paid becomes an uphill battle, then like all battles, it is a battle that is won or lost before it begins. In the famous words of Sun Tzu, the 6th Century BC Chinese military general, he observed that “the best victory is when the opponent surrenders of its own accord before there are any actual hostilities…It is best to win without fighting”. This also relevant to business and cash flow. Make your careful preparations beforehand and you’ll be much more likely to come out a winner.
So, it’s clear that the preparations you make before you “invest” in your customers are just as important as the actual investment. But what can you do to make sure that when you extend credit or services to your customers your investment is safe and sound? How do you ensure that “ hostilities” are avoided and business runs as smoothly as possible?
How ProfColl can help
We have a few tips, pointers and ideas to get you off to a fighting start. Let’s see if we can get you some answers in our next few posts. And don’t forget to subscribe to Cash Flow Corner to make sure you don’t miss these handy tips and more (see the side-bar)!
In the meantime, as a general rule of thumb, it is useful to remember that when you extend credit or services, you become an investor. Thinking like an investor is is a great place to start if you want to ensure that your cash flow and business stays healthy. Remember, cash flow is incredibly important for your business. If you have cash and services going out to your customers and clients, but none coming back in you’re going to run into some problems fast. Being smart with your services and cash beforehand can help save a lot of time and stress down the road. Subscribe to PCS for updates!