Beware of Business Complacency 

I was reviewing previous BTL newsletters and found the article below, which I originally wrote in 2014.  Ten years have gone by, and due to changing market conditions, the action items are even more applicable today than when the article was published. 

I will say it again, there is no time like the present to review, adjust and finetune your own internal credit and collection processes and procedures. 

Beware of Business Complacency 

In the world of petroleum marketing, 2014 brought some very favorable conditions which contributed to a year of great profits and business successes. The average price of gasoline is below $3.00 and bank interest rates continue to be low, both of which are big contributors to the banner year. Many of you are living in a very comfortable space right now. 

Here’s something to think about: comfortable spaces oftentimes lead to complacency and near-sightedness, especially when it comes to making changes in your business. Jack Welch said it best, “change before you have to.” 

The good news is, there is no better time to work on improvements than when you have some breathing room. This is the time to prepare your company for when the market turns, by focusing on improved business efficiencies. 

A good place to start on improvements is examining one of the single largest asset classes on a company’s balance sheet: accounts receivable. Making even small changes in this area can greatly improve cash flow. Keep in mind, when you are talking about changing both customer and employee behavior, it’s not likely to be fast and easy. Consider it more of a marathon than a sprint, but starting today will lead to significant positive changes you’ll be able to see in a couple of years. 

A few accounts receivable starting places include: 

  • Dig down into efficiencies you might be missing because of “the way it’s always been done.”  What technologies can you deploy in the credit function? Find out what day-to-day processes your credit folks are performing and systematize as much as possible. A good example would be automating that first touch when a customer is late with their payment. Send an automated email or letter versus making a phone call (or, even worse, doing absolutely nothing when that account first becomes past due). 
  • Reign in bad debt, even in the first bucket category. Whether it’s 10 or 30 days past due, this is a category that doesn’t lead to much lost sleep or major heartburn; however, profits are still leaking in this early stage. Many times, this customer behavior is easily changeable. They might just need a friendly reminder that you expect payment within the agreed upon terms.   
  • Perform credit reviews and credit limit analysis. Long time customers may be experiencing a change in their business climate, and a scheduled credit review sometimes turns up red flags.  Make sure the assigned credit limit still makes sense for the customer. 

By all means, enjoy these days of sunshine but be diligent about preparing for the rain! 

To learn more strategies for improving accounts receivable, or to talk about your company’s own unique situation contact Ann Pitts, The Pitts Group, at or 817-304-1533. 


Ann Pitts

The Best Captains Are Not Made From Calm Seas