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I want my money and I want it now.

I love the expression, "Money in the bank." When Michael Jordan makes his jump shot, it's like money in the bank. His coach feels good because he knows that shot is going in. Having money in the bank gives you a nice, warm feeling, like a bowl of soup on a cold winter day. If CFOs can increase their company's money in the bank, it validates their work. "Must be doing a good job we've got lots of money in the bank."

Recognizing the real and perceived importance of a strong cash balance, I make increasing the company's cash balance a high priority. It's relatively easy to make an immediate impact. I focus on two objectives: getting invoices out faster and getting involved in collections.

The conventional wisdom is that CFOs shouldn't bother with these tasks. They've earned the right to ask their staff members to do these tough jobs. In fact, if they're like me, they might have handled invoicing and collections early in their careers. Forget conventional wisdom. Lead by example. Roll up your sleeves and teach your staff how to actually enjoy invoicing and collections.


I reward my staff for working late, coming in early and doing whatever it takes to get invoices prepared as promptly as possible. Where it makes sense, we send invoices to clients overnight. My staff members are instructed to call and let clients know an overnight package is coming. The next day, staffers follow up with a phone call to the client to find out if it arrived. They ask, "Did you get our invoice? Great, now when do we get our money?"

But while speeding up the invoicing process is essential, nothing puts money in the bank like efficient collections. As we all know, sometimes customers don't pay their bills on time. I've always taken a customer's failure to pay as a personal affront. When I was part-owner of a leasing business, late payments really were an attack on my balance sheet. Consequently, if a lessee "affronted" me too often, I would go to his or her place of business and personally recoup my company's business equipment.

One of the proudest moments of my career was standing in the back of a pickup truck, with a big grin on my face, my shirt torn and my tie askew, holding fast to my company's very expensive copier, speeding back to our office. I had taken the copier back from a business owner who refused to make his lease payments. The guy wouldn't even take my phone calls. I decided to confront him face to face. But it didn't work out exactly as I'd expected.

As fate would have it, when I arrived to retrieve the copier, the business owner's assistant manager told me my nemesis was at an auto dealership, leasing a new car. I guess it was unreasonable for me to expect him to pay for the copier when he had those big car payments. I told the assistant manager why I was there, and after some prompting, the confused little man actually helped me load the copier on the truck. (It was a big copier and we couldn't have done it without his help.)

The irony of the story is the lessee's business was making copies. His entire livelihood was predicated on making money with this machine. But not anymore! Not surprisingly, the man who never once returned my phone calls telephoned me as soon as he got back in the office. He called me a thief. I informed him I didn't steal the copier - his assistant helped me load it on the truck. The business owner kept repeating to himself: "He helped you load it on the truck," first as a question, then as a declaration, then as an exclamation. When I stopped laughing, I told him to have a nice day. I was very, very happy.


Since then, when training my staff to do collections, I try to embed into their psyche the following principles:

* Money is good; more money is better.

* Don't believe anything anyone tells you.

* Never assume anyone is ever going to return your call.

* Assume whatever you send will be lost and will have to be sent again.

* Follow-up must be constant, unrelenting and polite.

* Your CFO is the only person who understands.

I once made the mistake of not following up on a tenant who was late with the rent. When I went to visit him, I discovered his company had moved out of our space. They left nothing - just a bunch of wires hanging down from the ceiling. I was very, very unhappy.

If close follow-up with your normal contact doesn't work relatively quickly, go up the chain of command. Somewhere, somebody will care. Years ago, I worked for a small company that couldn't get paid by a government agency for a $50,000 invoice, an amount that would have covered our payroll and paid off a few bills. I became so frustrated with the agency's lack of responsiveness to my inquiries about payment that I wrote a letter to the head of the department. The nicest thing I said was his payment office was extremely incompetent.

I was proud of my letter, but when my boss saw it, he was livid. He thought I'd lost my mind. He said if I sent the letter, I would hurt our chances of getting more work from that government agency. I asked, "What's the point of winning work if they don't pay us?"

Two weeks after I sent the letter, I got a phone call from a senior official at the agency. He apologized for the incompetence of the staff and asked me for a list of names of the people at the agency who had treated our company so shabbily. Shortly after this conversation, the $50,000 check arrived.

When I joined my current employer, the company had close to zero in the bank. Now, we have more than $7 million in less than five years, which is outstanding for a relatively small company. We have a hellacious current ratio. Everyone from the B.O.D. to the B.A.N.K. is happy about that. We did it by making a profit, getting invoices out the door super fast and by focusing on collections.

It's human nature to avoid collections because it's an unpleasant chore. My first job out of college was as a collector. The title was manager trainee, but the job was collecting past-due consumer accounts for things like furniture and appliances. I generally wasn't threatened more than once a week, and I don't think most of threats were that serious. I base that on the fact that most of the things people told me to do with their appliances weren't even physically possible. I couldn't wait to get up the ranks so I wouldn't have to do that stuff anymore.

Now that I'm a CFO, I don't have to do that stuff, but I do it all the time. I believe collections needs the active support and involvement of senior management. Most of all, it needs daily attention, but it's a function that burns out even the best people. To avoid that problem, rotate the job among your staff members. You don't want individuals doing it for too long. Otherwise, they become bitter and mistrustful. They won't even drink a beer with you after work because they think you'll stick them with the bill.

As for me, I'm past burnout. I actually like to hear the person on the other end of the line groan when I announce my name. It's a tough job, but somebody's got to do it.

Mr. Falconi is CFO of a defense contractor in northern Virginia.
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Title Annotation:chief executives in invoicing and bill collection work
Author:Falconi, Robert R.
Publication:Financial Executive
Date:Jan 1, 1997
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