We’ve been fortunate to get some great exposure recently. Earlier this month I was quoted in the Wall Street Journal and then in our local paper, the Gainesville Sun. And today our CEO, Geoff Wilson, is featured in an article in the New York Times in their small business section! The article, When Good Customers Become Bad Bill Payers, is about the difficulties of collections and accounts receivables for small businesses in today’s economy. As I’m sure is the case with many other businesses, we’ve been burned a few times.
So the article isn’t upbeat…so what? No press is bad press, right? OK, unless you’re Tiger Woods. That story just won’t die! Anyhow, here’s an excerpt from the article, written by Caitlin Kelly: Geoffrey Wilson, owner of 352 Media, a 10-year-old Web development firm in Gainesville, Fla., lost $165,000 in early 2008 when three clients did not pay. The three firms were start-ups, he said, two in Florida, one in Michigan. “It was devastating,” he said. “It damaged our cash flow and really hurt us.” The company, with major companies like Microsoft and American Express, did not have to lay off any of its 40 employees, but the experience left scars, Mr. Wilson said. “It makes you really angry,” he said. “These were clients we had extensive interactions with over several months, sometimes with as many as 50 meetings. It felt very personal. Suddenly you have to threaten them, sue them.” Today, Mr. Wilson is much more cautious about accepting new clients and is clear from the outset about payment terms — 33 percent upfront, raised from 25 percent in August 2008. Clients are now classified as standard or preferred, the latter being firms with 15 employees and at least two years in business. Standard clients must pay in full before material is delivered, and the business owner will be asked for a personal guarantee, he said. Some customers are newly candid about their own financial woes, “which we’d never seen before,” he said. “They’ve become very truthful. As a business owner, I really appreciate their honesty. It allows us to better plan our situation. I need an accurate understanding of what’s coming in instead of having a client simply go silent.” That last point Geoff makes is the most important I think. Everyone knows the economy is tough. It’s not your fault, so why lie about things and make it worse. If you can’t pay your bill, be honest. Work something out. It keeps the vendor from continuing work and digging your hole even deeper. Just some good advice!