Jamie O “Making Your Cash Flow”

I hear what you’re saying and can tell you we - at Wood You Like - have very strict terms of payments in place. Like you say, our clients agree with them and understand them because we explain it to them (verbally, on quotes and on order confirmations - so most ‘hear’ them three times!).

We’re very strict: no first payment? No ordering of materials i.e. no order. (We don’t ‘count’ ourselves rich too, only consider a sale a sale when the first payment is received. Received through one of the three options we give the client.)

Karin H.

I couldn’t agree more with your comments on bad debts. I am amazed at the number of business owners who do not place enough importance on credit control. They seem to think that sending out the odd statement here and there is enough to recover their money (you and I know differently). In my view business owners put far too much emphasis on “sales” (Turnover). It doesn’t seem to matter whether or not they receive the monies off of the back of the “sales” - a ludicrous situation.

What do they say “turnover is vanity and profit is sanity” Were I in a situation where my turnover had doubled but profits had halved due to a high incidence of bad debts, I would rather walk away from customers that didn’t pay me on time (effectively reducing turnover) and focus only on those customers that do pay on time - I guess this means that I am sane?

Karin, I like your comments too - this is another scenario that I have come across time and time again - to me the answer is very simple; collect as much money upfront as you can. Irrespective of what industry or trade you are in, if you can properly justify to your customer why you are asking for money up-front - they will not question it. Put it this way, if you give your customer a whole different range of payment methods, most of them will elect to pay you by BACS or cheque - this keeps them in control of when and if they pay you. If you push for cash up-front, or payment by Direct Debit or Standing Order, I guarantee that your customer will agree (Rather than asking questions of your customer when it comes to asking how they wish to pay, try telling them (nicely of course) that you only accept payment by way of Direct Debit, Standing Order, or cash up-front) I know for a fact that this works, as, all of my customers pay me by way of Direct Debit! I simply don’t give them a choice.

Jamie O “Making Your Cash Flow”

Kent

Never understood those trades who ’subsidies’ materials for their clients and have absolutely no Terms of Payment in place!

A local plumber friend of mine always grumbles he has cash-flow problems after paying for his ‘bespoke’ bathroom suites upfront. His client pays his total bill after all the works are finished.
When I suggest he puts different terms in place - e.g. materials and profit on those materials on delivery, ‘labour’ costs on completion - the answer is always the same:
“But that’s not the custom in my trade!”.

Being in debt apparently is
Karin H. (Keep It Simple Sweetheart, specially in business)