3 Times you should End a Client Relationship

15 Oct

customer-rightMaintaining a positive client relationship is important for maintaining a healthy cash flow no matter the size of your business. It’s simple: happy clients equal positive cash flow. For small business owners and new start-up businesses, it is even more important to maintain your client relationships because every client is an important part to the growth and success of the business.

But, should you always agree to work with a client? We say: No.

We understand that customers are hard to obtain; and we are by no means suggesting getting rid of all of your customers. As a business owner you need to assess the clients that you are working with and make sure that they are positively affecting your cash flow. It’s ok to say no. It may be hard, but some clients are just not right for your business. And why risk the frustration of chasing delinquent and unpaid invoices?

Make it a habit to review all of your existing client files annually on their anniversary date of being a customer. If this is a new business practice for you, a yearend review is a good time to start. This will allow you to make sure that customers are not slow paying you on an on-going basis.

As a good rule of thumb, always look into potential client problems; if the financial health concerns are only temporary you should work to keep them as a valued customer.

Here are three times that you should reconsider your relationship with a client.

  1. Client Consistently a Slow Payer

Even if the client is a repeat customer, if the client regularly pays you slow or is difficult to get payment from, it may be time to end the relationship with the business. Remember, all of the time that your staff spends chasing invoices and going through the collection call process is the business’s time and money that could be allocated for other efforts.

 

  1. Verified Industry Rumors of Client Problems

If you hear an industry rumor that one of your clients is not doing well financially, do not just go off the rumor. Investigate it. Is it payment problems or bad business health? Review your client’s credit application and contact some of the credit references to follow-up with their current payment history. You may receive a different response than when you originally called during your credit application investigation.

 

  1. Feedback from Sales Department on Client

Your sales department is often your first line of defense with clients. When reviewing your current clients, follow up with your sales department to see how their interactions with the client are. When the sales associate visits the business, have them check customer traffic and how the shelves are stocked compared to past visits. The sales associate speaking with the client could have picked up a tone or concern from the client. The client could have also expressed a temporary financial concern, which would explain the reason for slow pay.

 

Note: If you find a client who fits these criteria, never abandon them and cut ties mid-order. This could result in a bad industry reputation. Simply complete the order and be up front with your reasons to no longer accept orders on credit. You can always accept orders on COD. Do not let a client’s bad business health affect your business health. 

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