Dear Manager,

As a company and as a manager, an area that impacts all aspects of our business and the decisions to be made is cash. It’s true. Cash, and our ability to fund our commitments and growth, is paramount to any healthy organization. While financial matters are normally considered a separate department of our companies, their implications seep into all branches of our organization. The adequate flow of cash is king!

If a significant manufacturer or customer falls behind in their financial commitments, this impacts both cash and future sales. If a significant manufacturer or customer declares bankruptcy, this impacts profitability, and our ability to invest in our growth. Collections and accounts receivable are often a company’s most sensitive subject.

With this issue, I would like to share some fundamentals that might assist in your own cash collection process. It’s such a festive topic; I’m surprised it has taken me nearly six year to address it!

Having worked with dozens of companies over the years, I have seen numerous styles and approaches to the collections process. Some were highly successful, some were heavy handed and adversarial, still others reflected total mismanagement and a skewed sense of priority to collections. Ones approach is critical to overall success and the continued growth and prosperity of the company.

In any business relationship, there is an assumed mutual commitment for performance. This assumption generally proceeds with little direct conversation or specific pledge. It is simply assumed that if I deliver, you will pay. All parties proceed on good faith, and with mutual benefit of the doubt.

Problems only arise when this assumption and commitment to fulfill ones obligation becomes compromised. In most cases this is a simple oversight or short-term aberration. We have all found ourselves in this situation. It is critical for credit managers to remind themselves of this daily. Having developed this foundation, I also believe that this benefit of the doubt has a brief window of opportunity! Accepting debt, commitment, and accountability, are all very personal issues.

We also have the individuals and companies that thrive in an arena of deceit, misinformation and failed commitments. This is where we will find a condescending approach by individuals looking to create a problem where none exists! These are the individuals to whom this issue is unfortunately dedicated.

In some instances, the parties might have the very best intentions, albeit very poorly conceived. In the absence of proper financial resources they have chosen to roll the dice. They are betting on the come; betting that they can find success prior to their creditors landing on their doorstep. Yes, they are using our valuable resources to finance their dreams! I believe this approach to business to be deceitful, self-serving and dishonest.


Had we, as managers, wanted to be in the financial industry we would have become bankers! What is the difference between purchasing with no ability to pay, and stealing? Very little. Individuals such as these operate under the guise of businesspeople, when in truth they are common thieves.

There are numerous effective and creative approaches to this type of individual. With practice, the process of dealing with them can become even entertaining in its ability to hold them accountable, for perhaps the first time.


I always begin with a lot of questions in the hopes they will begin to dig themselves into the proverbial hole. Questions like: “Have we not fulfilled our original commitment?” or “Are you dissatisfied with the service we have provided?” or, “ I have had to assume that this is a situation of our making, as I know your intention was to fulfill your commitment to us!” It is critical that one approaches these probing questions with no preconceptions or edge in ones voice. You are asking for genuine answers to very fair questions!

This type of dialogue will, in the very least, open some doors and force their hand. If there are indeed financial problems, this is your opportunity to bring them to light. I would also ask, “Have you tried to contact us regarding your situation?

These individuals rely on “the con.” It is our job to gently but effectively use their words against them. Explain that you would like to be able to give them some additional time, but that your hands are tied. In fact, your own position is now being evaluated by their performance! Suggest that you truly need their help to get yourself “out of a jam.”

When asking for their payment plan, be ultra specific in your conversation and your notes. If payment is expected in ten days, does this mean it will be mailed in ten days or in your hands? Are they absolutely sure that this is “NOW” a commitment that they can fulfill? Do they understand that if they fail to do so, your mutual relationship will be in jeopardy?

One key to this conversation is to maintain an earnest and sincere approach to finding its resolution. If your approach is firm but fair, it cannot be judged critically. Do not give them any personal reason to justify not fulfilling this obligation. This individual will create any possible rationalization in order to defend their “dead-beat mentality.” Don’t do them any favors!

There are also individuals who in fact have the resources but have made the profound decision to bestow this financial burden on you. How gracious of them! There are two significant triggers that will motivate a response. The first relates to the fact that there are priority vendors. If a key vendor goes unpaid, they may suffer significant financial impact. This may impact their personal job security. Be sure to analyze your own position of strength prior to all conversation. Determine their prior order depth and purchasing cycles in addition to their prior payment history.

The second factor cannot be denied. Individuals oil the squeaky wheel. Become a squeaky wheel. These individuals live in the tomorrow, never the current moment, and are banking on your lack of follow through. Establish a very clear understanding that you are not simply going to go away. On more than one occasion an individual has suggested they would immediately write and mail me a check. Whenever logistically possible, respond with, “terrific, I (or one of my associates) will be over in an hour to pick it up!” Create a significant sense of urgency to fulfill this obligation, today!

Over the years I was confronted on occasion with a manufacturer we represented who made the choice not to pay the commissions due our organization and sales associates. I would proceed to explain that commissions are not just simply another accounts payable in their system. Commissions are payroll. It only seemed fair to ask, “How would you feel if you didn’t get your paycheck on time?”

These remunerations represented the livelihood of my team. Yes, it represents bread, butter, mortgages and braces. By the time a commission is due, we have completed our full investment in that sale. In many cases, the customer had already paid the manufacturer! Anything less than a full, complete and immediate payment was simply intolerable.

For me, the most effective approach and choice of words was: “Let’s not be confused. We have fulfilled our obligation, and you have my money in your pocket!”

Personal Regards,


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