Money-Go-Round

This story comes in various versions. I'll tell you the version relating to Wakkerstroom, a small, picturesque village 70km outside Volksrust. 

A travelling salesman, who was passing through arrived at the hotel one day and asked for a room for that night. The charge was R450 and the hotelier asked for full payment up front, which the salesman accepted. Having secured his room for the night, the salesman took the rest of the day off to relax and enjoy the scenery and birdlife for which Wakkerstroom is renowned.

The hotelier took the R450 to the baker. "Here's the R450 that I owe you, Jim. Glad to be able to pay you at last"

Jim took the R450 to the handyman "Hey Bob, I'm pleased to be able to pay you for fixing that broken window in my shop. Here's the R450"

The handyman drove down to the hardware dealer. "Hi David, I'm sorry I've owed you so long. Here's the R450"

David went to the hotel and paid the hotelier the R450 for the meal that he and his friends had enjoyed there a couple of months back.

Later in the afternoon, the salesman got a call from his boss telling him to get to Volksrust before closing time to see a prospective customer who had just called in.

The salesman was very apologetic, he had to cancel his hotel booking and was there any chance of a refund? The hotelier gladly refunded his R450.

The hotelier, Jim, Bob and David all slept well that night. At last their debts were settled.

What does this story tell us? What is so important to the health of business is not just money so much as the flow of money. Why do you have difficulty paying your creditors and your staff? Why is cash (or lack of it) the biggest cause of loss of sleep for so many of us? It is either because you're not making profits or, more likely, because of the South African culture of delayed payment of creditors. It slows the whole money-go-round down and everybody suffers.

What can you do about it? Deal with your debtors, the people that you sell to, not by constantly chasing them, begging to be paid. No, by withholding your services or goods until they have paid their account in full. Do you have the courage to do that? Are you so mediocre that they will go elsewhere and buy from someone who doesn't want their money? Or is your quality of product or service so good that they will respect you more for your confidence and gradually get used to paying you bang on time. It took our practice about 35 years to wake up. We lost two (mediocre) clients. We are now prepared to cut off our biggest clients if they don't pay promptly and guess what, they know it, so they pay. It's a bit like raising children. You only have to teach them the lesson of obedience once as long as you teach it well!

And now a last word. "The best thing the rich can do for the poor is to stay rich!" (I can't find who said that so apologise for not giving credit).  But why is this so true? The money-go-round is why. When the rich spend, the poor earn income. If the rich stop spending, the poor stop earning.


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