Rich or right

In this regular monthly column, Ken Olisa will try to ensure that pundits Professor Right and Ms Rich provide meaningful answers to readers' questions on how to build value in IT businesses. Please address your questions on any business topic to ([email protected]).

I have just realised that from our humble roots as a software house we have become a bank! A recent review of our accounts shows that our customers owe us a large amount of money - around 25 per cent of our annual turnover.

Should I start charging them interest, and if so at what rate?

Professor Right: There are two very important points to be borne in mind here. You aren't a bank and you should be very careful about calling yourself one. The law is very strong on this point and you don't want to find yourself busted by the men in pink coats from Threadneedle Street. So, avoid banking claims at all costs - even in jest. Clearly what you need to do is tighten up your debt collection - but that can be tricky.

Obviously, you want your money, but you can't afford to irritate your customers.

The best thing to do in the circumstances is make effective use of what we call the sympathy close. Visit the bigger debtors and explain that you are having a few liquidity problems and would appreciate it if they could help you out by making at least a part payment. You can extend the concept and help your cause by expressing your sympathy for them as they sort out the problems they must be having in their accounts department.

I am a strong believer in the sympathy close. It rarely fails, and when it does it is because you weren't going to get paid anyway.

Ms Rich: I agree with the prof. You aren't a bank. However, in this case it does pay to behave like one. You may have noticed that when you owe the bank money, it doesn't exactly use sympathy in its efforts to persuade you to pay it back. Neither should you. If you are owed money for more than a reasonable period - and in these bizarre times that probably means from 30 to 45 days later than the due date - get heavy.

I find that a stiff threatening letter to their accounts department from your accounts department, accompanied by an accurate and up-to-date statement will do the trick.

You send the statement so there are no disagreements about the facts.

You adopt a threatening tone so there is no misunderstanding about your attitude. And you send it from the accounts department in case you need a scapegoat:

'I'm sorry if some over-zealous member of my staff has sent you a letter in error. Let me just check the facts and then I'll discipline them for chasing non-existent debts. Oh! You do owe us money! So, I'm sorry, what exactly is the problem? We're not a bank, you know!'

I'm sick of all of this hype about the internet. Is there any reason why I should have a Website and has anybody ever made money from the internet?

Professor Right: I wholly agree with you. When you get to my age, you've lived through so many fads you can spot them a mile off.

I remember when the 96-column card was predicted to replace the 80-column punched card for computer data entry. But where are they today? Then there was the programming language APL. It was so powerful that if you were a genius you could write a complete payroll program in two statements - although its efficiency was somewhat impaired because it then took two more geniuses to debug it.

Today these fads arrive faster than my mobile telephone bills. Recently, there's been OLAP and data warehousing (whatever that is) and data mining which, strangely, you do in a warehouse rather than a pit. In fact, I'm surprised no one's come up with data bonfires and data power stations yet.

But I digress. You're right - keep your head down, let the internet hypers have their day and then everything will go quiet again and we can all get back to proper computing.

Ms Rich: I am old enough to remember when some industry pundits claimed the world's computing would be handled by less than 10 computers. The professor's right. Our industry is uniquely prone to jargon, fad, false predictions and hype, with the result that more tripe is talked about IT than any other subject - as the professor so ably demonstrates.

When you look at the industry's trends, it's worth considering an old commercial saying that over the years has helped me to make heaps of money - 'don't get mad, get even richer'. And from my perspective there are two kinds of trends - ones you can make money from and the ones that you can't.

The internet is clearly one of the former. I am amazed by how many people still rubbish the internet rather than seek ways to profit from it. My local cheese shop recently launched its own Website (www.teddingtoncheese.co.uk/www.-teddingtoncheese.co.uk/) and it has been inundated with orders from fromagophiles who have purchased gifts for like-minded friends and relatives.

Take, for example, Hotmail, a three-year old internet email company in the US. It won six million customers by the simple expedient of giving them free email addresses in return for detailed demographic information.

The cynic would claim this is proof that no one makes money from the internet.

However, the company was recently bought by Microsoft for around $400 million. That's what I call making money.

Whether you make money or not from the internet depends on how you approach the opportunity. Assuming on the technologically evolutionary scale you sit somewhere between the cheese shop and Hotmail, you should be able to find a way.

Ken Olisa is the founding managing director of Interregnum, a UK venture marketing company.