Forum Thermomix

Welcoming Center, Management and General Chat => Chit Chat => Topic started by: obbie on August 20, 2012, 10:03:58 pm

Title: Business question
Post by: obbie on August 20, 2012, 10:03:58 pm
If you had customers that are slow or overdue in paying.....

Would you respond to a offer of a discount if you paid us today. Example if you pay us today, i can give you a $$$ discount now.
Alot of customers want us (tradies) then we have to chase for 1-2 months to get money.

Thanks :)
Title: Re: Business question
Post by: dede on August 20, 2012, 10:12:24 pm
I wouldn't offer them a discount otherwise they will leave their account to late all the time. But it's frustrating chasing up owed money. I have a frame here I done for a customer 5 months ago, I have rang him several times and he has said he will come and pay for it as soon as he can, but a no show each time. The worst thing is the picture in the frame is something I wouldn't hang on my wall, so it's no good to me. :(
You could start letting people know your going to charge interest on overdue accounts.
Title: Re: Business question
Post by: Mama Fergie on August 20, 2012, 10:17:55 pm
I wouldn't offer discount  as everyone would come to expect it. They should be paying you extra on money outstanding. It's not right that you have to chase the money owing when the customer already has the goods.  >:(
Title: Re: Business question
Post by: Cuilidh on August 20, 2012, 10:18:14 pm
Obbie, we rarely discount - we tell our customers that we charge the correct price.  However, our two businesses and customer bases are quite different and tradies are doing it hard.  Just be careful - once you start discounting they will expect it in the future, so perhaps build a discount percentage into your pricing to allow for this.

However, having said that, if we are dealing with schools, we do offer a 10% discount for payment on stock parts if the invoice is paid in full within 30 days of invoice date (not EOM).  We do not include the calculation in the pricing, but as a note on the invoice itself - if you include it as part of the invoice total the discount is taken regardless of when they pay instead of it being an incentive to pay early / on time.
Title: Re: Business question
Post by: Cuilidh on August 20, 2012, 10:22:31 pm
Dede, your post made me laugh.  When we started our business 16 years ago we had a customer come in two days before christmas who needed some work done urgently, before the Xmas break ... we are still waiting for her to come back!  Fortunately it wasn't an expensive job, but very frustrating.

Mama Fergie, many wholesalers now say that they will charge a %age extra if not paid on time, but I am not sure how legal that is if it came to a dispute.  But I agree, it is tempting to charge a penalty for late payment, businesses have to purchase their goods that they sell on and if the customer doesn't pay it really ties up your income - businesses have bills comign in constantly and it is a delicate balancing act to keep your head above water a lot of the time.
Title: Re: Business question
Post by: fundj&e on August 20, 2012, 10:46:57 pm
Robyn are u the only pump shop in town
Title: Re: Business question
Post by: Halex on August 20, 2012, 11:57:30 pm
I woudnt discount but offer payment options over 3 months.

H :)
Title: Re: Business question
Post by: Cuilidh on August 21, 2012, 12:11:44 am
That's a good way to go, Halley.  I resent that only because we are then offering an interest free loan to our customers - it is very one-sided, but if it's the only way to get the payment then it is certainly worth looking at this option.  What I am trying to say is that, as our customers are struggling for money, so are we - it's a vicious circle!
Title: Re: Business question
Post by: Yvette on August 21, 2012, 12:31:30 am
I wouldn't offer a discount now if they haven't paid. In the future you could have a discount if they pay within 30 days or whatever the time frame you want this might work. Or make sure you get a deposit before work starts :)
Title: Re: Business question
Post by: Debbiebillg on August 21, 2012, 12:51:49 am
From an ex Credit Manager in large businesss, here's my tips definately offer a discount if you want large Companies and Government to pay on time.  Large companies can save themselves a fortune in usually overdraft interest charges by holding onto your money.

Accounts Payable departments process invoices / accounts in two categories.  They run a weekly prompt payment cheque run which pays all invoices which have a discount. Even those invoices marked as 7 day payment in general (depending on the company and any special arrangements), will be processed as a monthly payment unless they are risking losing discounts.

They run a monthly cheque run which would be their largest cheque run and hence why they drag these accounts out (they don't lose anything by doing so either).  The longer they can drag this one out the better as this is where they make the huge savings on overdraft fees.  Also if they are running their debtors on a 30 day payment cycle, they can collect their money before having to pay the creditors.

Just a little insiight, for what it's worth. I know you are talking small business, but if you deal with big business, may be of some help !

PS if you want to charge interest, then stipulate that this will apply on your "Application for Credit" if this applies, or on the order form when an order is placed.  It needs to be out there on some form of paper work that the customer is provided with.  It is also best to get them to sign the order so you have a record.  But yes definately legitamate to charge interest if the customer was aware up front !


 
Title: Re: Business question
Post by: cookie1 on August 21, 2012, 01:38:45 am
I've never been onvolved in a business but personally I would be really eager if stamped on my invoice was

"?% discount if full payment is received at this office by .......Date."

Give 10 days or 21 days for the discount and if it is received then pay the full price. This could lead to extra work stamping and putting in the date etc.
Good luck with getting your money. I had a holiday job in a paint company office and they never paid their accounts on time. Always very late. It was a well known company too.
Title: Re: Business question
Post by: obbie on August 21, 2012, 01:39:38 am
Thanks so much.
Yes d we do charge interest, its on our terms, on all invoices and quotes.

I still chase money every week, for the smaller customers.

Big ones are great on paying fast.

thanks again.
Title: Re: Business question
Post by: maddy on August 21, 2012, 02:32:32 am
Thanks so much.
Yes d we do charge interest, its on our terms, on all invoices and quotes.

I still chase money every week, for the smaller customers.

Big ones are great on paying fast.

thanks again.

Your lucky you have good ones Robyn.....some of ours are the pits!  >:(
Definitely.....do not offer discounts on paying their account....are you re issuing their invoices with a big red stamp saying "overdue"?  That most of the time hurries them up.

Don't get me started on non-payers!!   >:( >:( >:( 
Because we supply varied farm services, we have to pay for the products used before doing the jobs....it can be thousands, and when they won't pay up....we're out of pocket!   We are a small business that doesn't have unlimited funds....it gets me so steaming mad!
Any new customers, or extremely large jobs....we now get them to pay for the product upfront before commencing....if they don't like that idea....the job will not be done for them  ;)
Title: Re: Business question
Post by: obbie on August 21, 2012, 02:38:36 am
Maddy, same as us. we are small, repair alot of breakdowns, no water ect.

We ask for 50% deposit on all quotes, sometimes you can't quote, you just have to go and fix it..


Its all the smaller ones, $1-$2000 that add up, and having to chase all the time. 
Then some try to claim insurance, so that is on our terms now too. 

Main customers, govt depts are fine.
same as us, small business, lots of upfront costs, slow payers.
Title: Re: Business question
Post by: Cuilidh on August 21, 2012, 02:59:47 am
We are a small business that doesn't have unlimited funds....it gets me so steaming mad!


I'm with you on that Maddy.
Title: Re: Business question
Post by: teagg on August 21, 2012, 12:35:26 pm
I quite like the invoice that I received just recently... in small writing at the bottom, there was a comment that there was a $200ish discount if the bill was paid by X date... an incentive to pay early...
which i assume has been factored into the original price to start with...

so i 'feel' i'm getting a benefit if i pay promptly and if i don't, then they are getting a larger payment...

having said that, i now offer to pay upfront, rather than expecting them to stump up the charges and then I saunter along in my own time to pay!!!
Title: Re: Business question
Post by: gertbysea on August 21, 2012, 01:37:20 pm
 I know  of one huge company that pays every invoice $5 short. Can you imagine how that adds up for them .  Clever accountant I say because most would not notice and if  they did they would not chase up five bucks.

Gert
Title: Re: Business question
Post by: Cuilidh on August 21, 2012, 09:23:02 pm
... so i 'feel' i'm getting a benefit if i pay promptly and if i don't, then they are getting a larger payment...

Yes, it's a psychological trick.  Put the price up, then offer the customer a discount and they think they have 'won'.

We once had a customer who asked us for a discount and we said no, we charged the RRP.  Customer said they could get a discount at another shop so we urged her to go there as it was a better price for her.  She came back an hour or so later (after spending money on petrol and parking as well as using her time to get there and back) to say that, even with the discount, the other shop was more expensive than us and she purchased the item from us in the end!  Just as a matter of interest, the RRP of the item in question was c. $50.00!
Title: Re: Business question
Post by: obbie on August 21, 2012, 11:48:26 pm
Marina, yesterday I rang a customer asking for payment, which was overdue.

 It is 3 weeks since we did the job, so our terms are 7 days.   She says, yes its at the post office, but we haven't got the mail yet, so when we do, well get around to it.

So I am now sending her a invoice for interest. :)
Title: Re: Business question
Post by: mcmich on August 21, 2012, 11:51:12 pm
That's terrible Robyn.

I'm sure she would be jumping up and down if you did the work when got around to it.
Title: Re: Business question
Post by: Cuilidh on August 22, 2012, 12:13:26 am
Yes, and I suppose "the cheque is in the mail" will be tomorrow's story!  Is there any way you can do what we do, i.e. not release the work until payment has been received?  Once the job / goods / service have left your premises your control on receiving immediate payment is also weakened.  If you have to do a service on the client's site, is there some way your guys can issue an invoice there and then so at least that is one less excuse for holding up payment?  Maybe making it clear at the time the service is requested by your customer that payment is required on completion of the job?  give them as close an estimate as you can so there is less chance of problems when the time comes?

I know I recently had to call in someone to come to service our washing machine and it was made crystal clear when I made the booking that immediate payment would be expected.  I know your main clientele are farmers and many are struggling, but they must appreciate that you need their money so that you can continue servicing them in the future.  It does no one any good if you have to close down (not that I am suggesting for a second that you will, but always keep in mind that you are just as vulnerable in your own way as they are).

There is no easy answer but keep a sight of your ethics and keep doing what you do best.   Also is there someone nearby whom you can approach as a mentor to your business?  Just being able to talk to someone else and bounce ideas back and forth (brainstorming) can be a huge help.
Title: Re: Business question
Post by: obbie on August 22, 2012, 01:00:40 am
Thanks Marina.. :)
Title: Re: Business question
Post by: Debbiebillg on August 22, 2012, 03:27:04 am
Marina, yesterday I rang a customer asking for payment, which was overdue.

 It is 3 weeks since we did the job, so our terms are 7 days.   She says, yes its at the post office, but we haven't got the mail yet, so when we do, well get around to it.

So I am now sending her a invoice for interest. :)

Just another tip from an ex Credit Manager, if they say the cheque is in the mail ask them to supply you with the cheque number, it's meaningless to you but I have had many a people tell me the cheque is in the mail only to find out they thought they'd done it and hadn't.  By asking for the cheque number, it forces them to find their cheque book, look it up (which confirms they have written it)and tell you the number, then also ask for the date on the cheque butt and the date they think they posted it.  All of these questions, let them know, you're not messing about ! And they can't fob you off with "the cheque's in the mail".

Likewise, if they tell you that they have paid by direct deposit or Bpay, ask for the transaction number (also meaningless to you), and ask them to check that the payment has been deducted from their account (they can be forward dated, so this checks that this isn't the case).  If they tell you they'll process the payment that day, ask them to call you back with the receipt no. and if they don't call, call them !

If someone is in a situation where they seriously financially can't pay, work out a payment plan, diarise the dates when the amounts are due and ring them without fail on the day ! Always better to get something, than nothing ! I used to send out sales reps to pick cheques up for me, hard to not pay when someone's there to get the cheque !

Ohhhhh I miss my old job ! The thrill of the chase ! Being a Mum is of course rewarding too but  I'm just getting to the stage where I need to return to work for me !

Title: Re: Business question
Post by: obbie on August 22, 2012, 04:08:52 am
Thanks Debbie, I chase all the time. I have even been offered a job as a debt collector.  ;D

All our friends ring me, when they have to chase and ask advice.


I explained to a guy last week, I am not giving him any more credit, as per our trading policy. He has to pay upfront, like everyone else.  He then complained to my DH the next day, who totally backed me up.  :) Its going to take him 3 weeks to pay $120, but he buys takeaway coffee, and smokes.... I said I am not a lending institution. :)

Title: Re: Business question
Post by: droverjess on August 24, 2012, 08:14:02 am
Good for you.
We had to take a customer to small claims court this year. She had to pay costs too.
Bet she thought we wouldn't chase her, but she owed and wouldn't pay.
All good now.
Title: Re: Business question
Post by: obbie on August 25, 2012, 02:29:37 am
I send the overdue ones to a legal firm, which does collections too.
the rate is 25% plus my 18% interest.

it works.. :)