Selling to the right customers

man with binoculars

 

I first joined the invoice finance industry in 1987 and my first boss, an ex military man, continually used to say “time spent on reconnaissance is never wasted”, he said it so often it became boring but nevertheless memorable and relevant.

I have a client, an engineering business based in the Midlands, that has been approached by a potential customer based a very long way from the Midlands.

On the face of it the possible customer seems sound and creditworthy but a quick look a bit beyond the immediately available information is revealing.

The Director of the potential customer has a series of insolvent companies behind him, all of which appear to have fallen over leaving creditors with nothing.

The sort of insolvency history this Director has suggests either seriously poor business management skills or a deliberate and cynical approach to creditors.

My client was pleased to have been approached by a possible new customer with talk of a sizeable order and I take no pleasure in diluting the excitement with the revealing detrimental information. There remains a possibility this could work but it will require a significant deposit (rather than the customers preference of 30 days from month end terms), a higher price, insurance and funding (the higher price accommodating the cost of insurance and funding)

Whilst the initial reaction to a new customer win is likely to be strong remember that a customer is only a good one when payment is received. An approach by a possible customer a long way off patch in itself is worth considering but look beyond the headlines.

I use a tool called Red Flag Alert which provides a good picture of businesses and enables a Directors history to be scrutinised. There are many similar data providers available and whilst they come with a cost the possible ramifications of a serious bad debt could be worse

woman with binoculars