Interesting question. Your father must’ve had some of the same customers I do - especially since rates have risen.
To me, this is going to depend a lot on the business’s capital situation. If they’ve done a good job managing that and have plenty of access to capital, then this isn’t a horrible problem to have. It’s still a problem - because any cash or debt used to float slow-paying customers will erode margins and/or limit opportunities.
Everybody wants customers who pay promptly without any need for, er, enhanced encouragement. But if you ever come across a place where this exists in great supply, let me know. In the world I’m familiar with, dragging out suppliers and subs is a time-honored tradition.
So the question becomes…would I try to restrict sales growth in the name of more fluid cashflow?
Not unless I absolutely have to.
And this is one of the reasons that we have always retained as much earnings as possible. Cash, or something nearly as liquid, is an absolute necessity for growth - if, anyway, growth is a goal. And I’m from the school of thought that a business is either growing or dying.
That said, as you grow, it’s always a good idea to be more diligent in assessing creditworthiness of potential new customers (and, really, existing ones too…things change) and to also get more aggressive with collections strategies.
Great question!