Bad Payer Cull

I cam across this fascinating occurrence courtesy of a decently sized accountancy practice.

They had begun to suffer a growing debtors book. Lots of people owed them money. And this uncollected cash pile was getting worryingly larger.

With only one admin person that could chase the bills, those that conducted the work were being dragged in to ask for the payments. They were not happy, as this was eating up precious time. Billable time that should be devoted to clients that had the respect to pay on time.

So the Managing Partner made the call. The bottom ten percent of the bad payers would be dispensed with.

Legal letters were sent to recover monies owed along with a statement that they would no longer be considered a client.

Incredibly, most of the other non-payers got wind of this, and paid immediately. They didn’t want the hassle of fiding another set of bean counters, it seemed.

Overnight, the entire Practice mood lifted. Everyone was happier.

This success reminded me of working for SMEs when the seller was often called upon to chase remittance. It was a real bind. If only someone high up in finance had the gall to kick the rotten ones out.

But couldn’t this principle apply to other arenas too?

How about that prospect that never plays ball? What’s the typical length of response time, for instance? Who constantly chows away your margin? How much growth potential is never going to be realised?

It could be that a bad attitude cull is also a worthy exercise on our own forecasts.