5 Mistakes That Can Hurt Your Cash Flow
Mistakes are a part of life and they are definitely a part of business. As a matter of fact, mistakes are a part of learning. The more mistakes you make early in the learning process, the more you learn about what will not work and about the limitations and boundaries of the field of play.
On the other hand, customers have a strong dislike for mistakes. In fact, according to research, it is the #1 reason why they pay their bill late. Some of the mistakes they dislike the most are incomplete orders and wrong deliveries, invoicing errors and missed deadlines. These mistakes drag down one of your internal processes that you would like to speed up, cash flow.
Here are some of the mistakes customers dislike the most:
1. Incomplete Orders
Nothing is more disappointing to a customer than opening their package or shipment and finding out it’s not all there or it’s not what they ordered. For instance, if you do not keep accurate records of your inventory and shipping, you can be rife with glitches, errors and unhappy customers. In fact, over deliver if possible.
2. Wrong Deliveries
While some of this might be out of your control if you use a third-party shipment vendor, you need to do your best to control what you can. Make sure your database is clean and updated. Giving customers the ability to be as thorough as possible on exactly how to get their goods and services delivered can pay you in ways you haven’t dreamed. Our office address has been mentioned as one that is hard to find the first time you visit. The number to our building is oddly located, it’s there, but you would need to know exactly where to look to find it. Having the ability to give extra description on delivery locations can help greatly.
3. Invoicing Errors
This one is self-explanatory. Customers are very unhappy with bills they think are in error. Make sure your internal accounting controls are up to the quality they should be by ensuring your invoices are always correct.
4. Missed Deadlines
Customers are getting more and more accustomed to knowing exactly when to expect various stages of the delivery process to happen. If it’s getting your car fixed in the body shop to receiving a pizza on Saturday night, due to technology and apps, they want to know when it’s being buffed, painted and waxed, they want to know when the dough is being prepared, the pepperonis are being applied, when it’s in the oven, in the delivery vehicle and on its way! When you give a deadline, you have told the customer they can schedule their project or their celebration around your deadline date, don’t disappoint them. In fact, arrive a little ahead if possible.
5. Torn or Damaged Packaging
This is a real brand killer. You probably spend quite a few dollars promoting your brand, your products and your services. You are trying to build up positive equity with customers to persuade them to purchase your stuff. There are not many more downers than getting something that is damaged. The book is torn, the dog food is ripped, the plate is broken, etc. This not only costs you by replacing the damaged item, but also in the trust and faith the customer put into your brand. Even if this is not your fault, you need to make sure your terms and conditions with your third-party carrier is such to protect you in these instances.
Mistakes are a part of life and they are definitely a part of business. However, the 5 mistakes can hurt your cash flow.
All of these mistakes and others not mentioned here are reasons for low and slow cash flow production. Go through your business processes with an eye for analysis to eliminate and reduce these mistakes because they are definitely costing you more than you think. Some of it is tangible cash and some is intrinsic cash, but it is cash regardless! Set up quality control systems to make sure all the jobs that need to be done to get the product or service to the customer is being delivered with a high-quality standard.
Make sure the same people who make the mistakes are tasked with fixing them. Don’t make the mistake of having a “clean-up crew” whose job it is to cover for the original team. You will increase learning if you have the people who are accountable for the items to be the ones who have to handle the adjustments. Also, develop a record keeping system of all mistakes that happen so you can measure your mistakes, what caused them, how they were fixed and the amount of improvements you make. You will find it will correlate directly to your amount of cash flow increase and decrease.
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