Clients are the most precious assets for a business. Without clients, there can be no business. With poor quality of clients, the business will be poor and if you manage to get very good clients and retain their loyalty, your business will only go up and up. This all sounds very exciting. But it is not easy to get very good clients and all the more difficult to retain them. After all, whatever you do, your competition is trying the same and may use better techniques to get business. Are there any innovative approaches to client relationships?

We are talking about direct sales in this discussion and not about selling merchandise to large consumer base. For example if you are a contractor maintaining air conditioners in clients work places. Or a direct seller of computer hardware to business buyers, and all such businesses where your sales to individual clients are large, and you are in direct contact with clients.

The first need is of course client satisfaction. If the client is satisfied with your response time, after sales service and can depend on you, pricing may become secondary. All clients do not buy from a supplier whose sales at the lowest price. If your product cost is a small percentage of clients total expense or if your product is essential for your clients, you are onto something good. How to retain such clients despite all the competition? What are the other factors than client satisfaction?

Relationship is one such other major factor. Do you relate with your clients only professionally, or are very good friends? Both these extremes can hurt. For a long-term business relationship, good friendship is not good for health of your business. Any problem in the personal friendship will directly affect your business. What if you relate to your clients mechanically in a professional style totally devoid of personal touch? You know the answer yourself.

What is needed is a relationship that does not border on personal friendships, but crosses mechanical approach. A fine balance between personal and professional.

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Peter owns a successful business that is growing quickly. Like many businesses, Peter’s company has good commercial and government clients that buy regularly from him. And since Peter is really good at his business, his clients have been purchasing more and more products from him. His business appears solid.

But some cracks are starting to appear in the foundation. He’s been close to missing payroll twice. He’s delaying supplier payments. Even worse, he chose not to bid for a major government contract because he couldn’t afford to. That’s true – he couldn’t afford to bid for new business. He was afraid of having to add more employees and buy more materials.

How can that be?
Like most business owners, Peter extends terms to his clients. They usually pay him in 30 to 45 days. But, since Peter runs a small business, his suppliers demand that he pay them in 10 days. Plus employees need to be paid every two weeks.

In summary. Peter has clients that want to pay in 45 days and suppliers/employees that want to be paid in 10. Since the company does not have a lot of money in the bank, the math doesn’t work.

Is there a solution? Yes, Peter should consider factoring his invoices to fix his cash flow. Factoring will provide him with the necessary cash to pay suppliers and employees, while eliminating the 30 to 45 day wait to get paid.

Invoice factoring works as follows:

1. You deliver the product or service and invoice your client
2. You send a copy of the invoice to the factoring company for financing
3. The factoring company advances you up to 90% of the invoice. You get immediate funds.
4. Once your client pays the invoice, the transaction is settled

With factoring, Peter will be able to meet his current obligations. His company will also have enough cash on hand (or liquidity) to bid on new job proposals, allowing him to grow the business and take it to the next level.