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Your accounts receivable problem is a marketing problem

March 27, 2011

I bet you never thought of it that way.  But if you run a business and you keep selling to customers that continually owe you money or pay late, what you really have is a marketing issue.  Why?  Because you are selling to people that owe you money because you don’t have anyone new to sell to.

Think about it for a minute.  If you had a choice of selling a product or service to a new customer that will likely pay on time or to an old one that never pays on time, which would you choose?  Okay, I get there may be a personal relationship, but all things being equal, if you could choose, it would probably be to the new client that appreciates your goods or services and will pay.  Not to the deadbeat who is always making excuses as to why they are late.

We all need cash to keep our businesses running. And that means customers that pay on time. If you can be more selective in who you sell to (it is a free country after all and you are probably not compelled by law to sell to anyone), then you can keep your prices higher and your cash flow, flowing.

So investing in marketing is not just required for growing your business. It is also required to keep your business healthy by having more potential customers to choose from.

I talk to a lot of business people who say they have all the clients they need or that their pipeline is really full and they could not handle all the business if they all bought. I’m sorry, but who said you had to sell to all of them? The luxury of having a large pool of prospective customers clamoring at your door is that you get to choose who you are going to do business with.  If you don’t have that pool, well, any sale looks like a good one because it (potentially) keeps revenue coming in.  And if those sales go to the customer that never pays on time, well, that’s how your (lack of) marketing caused your accounts receivable issue.

So clean up your accounts receivable.  Identify your ideal customer, build a marketing calendar, create a long of list people who would like to buy from you and that you would like to sell to.  And if you want some help in getting that process going, call us.

Dan Kraus
Written by Dan Kraus

With more than two decades of experience in sales, marketing, and go-to-market strategies, Dan Kraus has developed a deep portfolio of experiences that he now uses to help small businesses profitably grow their businesses. As an entrepreneur, Dan understands the challenges of growing a business with limited capital and human resources. As a line of business manager in larger companies such as SAP America and Great Plains Software (now part of Microsoft), his experience launching new business ventures inside reputable organizations established his reputation as a creative and effective executive that could both plan and execute within corporate confines.

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