Cheque’s in the Mail

We’ve all extended the courtesy of trading terms to a customer only to have to chase up a payment after it has gone beyond the due date.  It’s an old cliché that they have posted the cheque and is used to avoid the embarrassing conversation that they haven’t or can’t pay us.  While still a preferred payment method  in some economies, thankfully in Australia electronic banking has become prevalent and conventional allowing us to confirm that day if a deposit has been made and tighten up our cashflow.


We assume the burden of risk when we start our own business but that doesn’t mean that we should simply accept risk as a consequence of our enterprise.  Managing cashflow is one of the most essential tasks in  every business and if we accept poor payment habits from our customers we are unnecessarily increasing the risk and exposure to ourselves.  Failure of what may otherwise be a very good operation often happens not from a lack of profitability, but a lack of of liquidity.  Even in retail operations where it is normally payment at point-of-sale I have seen volume hunting drive poor decision making and credit extended to customers that you just know will come back to haunt you.

On the 26th July in 1775, a postal system was established by the 2nd Continental Congress of the United States with the first Postmaster General being Benjamin Franklin; access to communication in this case a postal service is a crucial aspect of commerce.  106 years later in 1881, again on the 26th July, Thomas Edison and Patrick Kenny executes a patent application for a facsimile telegraph (U.S. Pat. 479,184) and again just over 100 years later on 26th Jul in 1998  AT&T and British Telecommunications PLC announced they were forming a joint venture to combine international operations and develop a new Internet system. The joint venture, known as Concert, proved a money-loser and was shut down.

It is interesting that these events all occurred on the same date in history.  They all demonstrate the development in advanced economies  that prosperity provides access to better infrastructure such as the postal service or transportation systems.  While it may be public money that is invested, it is the taxation base we draw from prosperous private enterprise which creates the means to raise this money.  It also provides better access to ideas as we improve the means to share knowledge, it is a multi faceted benefit that we experience from successful enterprise.

Enterprise constantly seeks new and better ways to deliver value to customers, it is through constant improvement that we see better system of commerce, breakthroughs in medical science, and with it longer, wealthier and healthier lifestyles.  What it also shows in the example given is the importance of it being private enterprise that assumes the risk associated with return for effort.  We don’t always succeed when we try something new and in the case of AT&T and British Telecommunications a loss on return resulted, something we would not find acceptable in political terms if it was a public institution playing with taxpayers dollars.

The most important lesson to take away today though is not to accept poor performance by customers that are slow in paying, you either need to improve your message in communicating the value of what you do so that they want to pay you on time, or consider if you need customers that don’t appreciate your value.


Trevor Dixon

Chairman Small Business Foundation

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