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50% Deposit

Discussion in 'Business Management' started by deegrafix, Jun 3, 2011.

  1. deegrafix

    deegrafix Member

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    Montrose, MI
    I know I've seen this subject here before, but didn't get a response on search....

    Every year or so the "financial partner" at my biggest client's company tries to re-train me to do jobs without deposits and I guess today is the day. Our arrangement for many years up until last year was 50% down w payment upon completion. Due to some issues they had last year I agreed to wait up to 30 days for the final but it's usually about 10 days.

    They are a multi-million dollar company with 30+ employees and are very busy this year and hiring people.

    I asked for a $975.00 deposit and got this reply:

    we cover our working capital, can you please see what you can do with yours.

    Right now they owe me about 3K, for about 10 days. My company is a one-woman show with part time helper when I'm very busy and he knows that. I can think of many things to say to the man, but must walk on eggshells so I though I'd come here and burn off a little steam before answering him.

    My working capital is the 50% deposit! He's comparing apples and oranges. Also I don't want him to think if I do it once it will be standard procedure from now on.

    Any ideas?

    dee
     
    Tags:
  2. deegrafix

    deegrafix Member

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    Montrose, MI
    you STILL have to pay up, sucker. (but not in those words....)

    My thoughts exactly!
     
  3. Joe Diaz

    Joe Diaz Very Active Member

    If you wanted to be jerk back you could say:

    We can't, but then we pay our bills on time.
    :Big Laugh

    All kidding aside, If it were us, I would say it's not about working capital, it's our company policy. A policy we use working with all of our clients.
     
  4. signguy 55

    signguy 55 Member

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    I feel your pain. What "financial issues" did they have last year that made them unable to pay a deposit as normal?

    If a multimillion dollar company can't / won't pay a deposit of less than $1000.00 it's not worth it, no matter how badly you need the work.

    The big boys get to play by their own rules (Donald Trump's 4 bankrupties that were never mentioned by the media).

    Just tell them you wish you had the "liquid assets" to cover the deposit, but good faith and someone's word just don't cut it anymore. This would be a good time to "poor mouth" yourself, everyone knows the service sector has taken a beating in the last few years.

    50 years ago major deals were done with a handshake and maybe a "contract" written on a grocery bag but it's a different world now.

    The oldest trick in the book for big corporations is to take all their accounts payable and sit on them, letting the money that would be paid out sit in the banks for a few extra days or weeks, get enough sitting there even at low interest rates it adds up.

    Hope you get it worked out.
     
  5. artbot

    artbot Very Active Member

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    50% down, after an approved design is signed off on. net 30 days.

    if you can't afford to wait 30 days, you can have your invoice factored.

    anything less tells the client, they picked a company that is in dire straits and can afford to keep the doors open.

    not to be offended by the comment... i'm sometimes cash heavy and don't care if they pay me net 90, sometimes i am installing with borrowed gas money to get there. but whatever the case, anything shorter term than net 30 amounts to asking the client to loan "you" money.

    the client factors their invoices when necessary and doesn't ask their clients to pay early, they expect the same from you.
     
  6. I fired a company because they got to be 60 days out with out any kind of deposit.

    When the money came, it was great.
    But those 60 days were a killer.
    It created a hole that was hard to climb out of.

    Without workin' capital, they ain't no workin'
     
  7. Gino

    Gino Premium Subscriber

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    You have a few choices... with the first one not being a good one.

    • You can tell them these are your terms. Like it or leave it.
    • The way in which they run their business has no bearing on how you run yours.
    • This project is a project for your company and we are not financing your business. Please pay the required 50% deposit in order to finance your own project so we can get you on our schedule.
    These huge companies make money by NOT using their money... or a little as possible. They want to use your money so their investment stays safely in place.

    You must be willing to walk away from all business according to which stance you take. You caved in last year and now they now you're desperate.... or at least appear desperate. They will continue to do this, unless you stop them now.

    We have a few customers that spend well over $20,000 to $550,000 at a time with us. They pay a 50% deposit with a balance paid upon completion, but we do give them a 10 day grace period for mailing and other incidental reasons.

    Be stern/firm, but be professional and don't let this become a male vs. female debate. Otherwise you'll lose immediately. When someone pulls the race card, minority card or any other prejudiced prank with me.... I refuse to go any further. So, try removing some of your comments out of the equation and your tone when speaking with him.


    Good Luck.........​
     
  8. deegrafix

    deegrafix Member

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    Jul 9, 2006
    Montrose, MI
    The oldest trick in the book for big corporations is to take all their accounts payable and sit on them, letting the money that would be paid out sit in the banks for a few extra days or weeks, get enough sitting there even at low interest rates it adds up.

    That's exactly what he's thinking, that and he likes to play God whenever he can. This is not my first go-around with him!
     
  9. slappy

    slappy Very Active Member

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    slow collection on their part reflects your working capital and that's not okay. I'd just say...

    I'm sorry, my working capital went down with your previous order(s). Please send a check for the 3K from invoice XXXX and we can waive the deposit on the $975 and bill it net 30.

    Thanks
     
  10. heyskull

    heyskull Very Active Member

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    If they haven't 50% they most certainly do not have 100%!!!!!
    Big company (30+ employees!!!!) or not............ they are taking the p*ss.
    We have a similair customer and as of yuesterday they will be taken to court.....!!!!

    I hate customers stating MY terms!!!!!!
    I am not a bank....

    SC
     
  11. earplug

    earplug Member

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    The NEW terms now include 0% Financing!

    100% Down and no monthly payments!
     
  12. deegrafix

    deegrafix Member

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    Jul 9, 2006
    Montrose, MI
    You have a few choices... with the first one not being a good one.
    • You can tell them these are your terms. Like it or leave it.
    • The way in which they run their business has no bearing on how you run yours.
    • This project is a project for your company and we are not financing your business. Please pay the required 50% deposit in order to finance your own project so we can get you on our schedule.
    These huge companies make money by NOT using their money... or a little as possible. They want to use your money so their investment stays safely in place.

    You must be willing to walk away from all business according to which stance you take. You caved in last year and now they now you're desperate.... or at least appear desperate. They will continue to do this, unless you stop them now.

    We have a few customers that spend well over $20,000 to $550,000 at a time with us. They pay a 50% deposit with a balance paid upon completion, but we do give them a 10 day grace period for mailing and other incidental reasons.

    Be stern/firm, but be professional and don't let this become a male vs. female debate. Otherwise you'll lose immediately. When someone pulls the race card, minority card or any other prejudiced prank with me.... I refuse to go any further. So, try removing some of your comments out of the equation and your tone when speaking with him.


    Good Luck.........​





    Gino,

    I have no intention of caving, and will respond in a firm but polite manner. I'm just putting it off till Monday so I can adhere to the polite part. haha. The guy has No sense of humor, (typical accountant type). Your 3 points are right there with my line of thinking. Not sure where you saw the male/female issue?

    I have 4 more trucks ot of 7 already on contract, 3 done, one paid in full, waiting on 2 finals and the others to be completed as they're built so will be doing business over there until October. He had no issues with paying a 15K deposit on all that and now wants to cry about $975.

    I think it's a power play on his part to get me to change my deposit policy. It's not worked for him before but he doesn't stop trying....
     
  13. deegrafix

    deegrafix Member

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    Jul 9, 2006
    Montrose, MI
    they are taking the p*ss.

    I can sorta guess the meaning but would you mind explaining?
     
  14. Gino

    Gino Premium Subscriber

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    It came across to me instantly as a reverse chauvinistic remark. Anyway, it sounds like a nice account.

    We had a customer, which has been a customer for over 25 years. The owner and I sat down one day and hashed out new terms about 10 years ago. He simply said he didn't want to pay a 50% deposit. I said, me neither.... at least not for your company. He was too big to do this and then pay a second check a few weeks later. It became a bookkeeper's nightmare. I asked him why he thought it fair for me to finance his [rather] large company ?? He said, well you have nothing invested but some vinyl and a man's labor. Do you mean you can't afford to do that ?? I looked at him and said.... of course I can, but than I'd have a problem. See, we have many of these same kinds of projects going on at any given time of the year... all year long. Then little ol' me would be financing all these large companies and not getting reimbursed for it one penny. As things add up and someone is a little later and later and later.... I'm out everything.

    Okay Barry, here's what I'll do for you. You don't pay me a deposit, I add about 8% to the overall amount and you promise to pay me In Full before 10 days pass from the date on my invoice. He said fine. It all went hunky-dory until about two years ago. The company is in financial trouble and the new guy that does the ordering is doing everything by the book. He has to get three bids on everything and needs 45 days terms with no deposit. I tried to pull rank with him and tell him we've been doing your work for 25 year and Barry and I have a standing agreement, so I won't play by your new rules. Got a call from Barry's secretary asking me if I would give a quote and reconsider our terms. I said, no not at all. I've had an agreement with Barry for all of these years and I don't care what problems you're having, you're still far larger than me and I can't finance you guys. Got a call from the dispatcher a few days later saying...... we have to do this by the book, but if you put on your invoice the terms, we will have to abide by your conditions. To this day, they are still a good customer, but I had to either back down and accept their fake terms or stand my ground.

    This had nothing to do with winning or losing.... we had the account, but sometimes as you mentioned.... people can get head strong and you just need to be able to walk away and not look back. It's more about strategy.

    We had service, price and quality going for us. However, we didn't have their terms. I was not about to back down, although I desperately wanted to keep their account, but couldn't show it. I would've walked.
     
  15. Joe Diaz

    Joe Diaz Very Active Member

    You know if paying 50% down and then 50% after completion is a bookkeeper's nightmare, they could always pay 100% down. :Big Laugh
     
  16. m_s_p

    m_s_p Member

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    I agree with Gino on larger companies not liking to hassle with writing 2 checks. I would try to get ahead of this before I lost the account.

    We have a lot of accounts on 30 days that will normally pay in under 15. If you can offer terms of 10-14 days it would be a good show of faith on your part.

    Tell him you will offer terms but if he makes a late payment he will go back to COD. If projects are not picked up or scheduled for installation in a timely manner go back to 50% deposit.
     
  17. deegrafix

    deegrafix Member

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    Jul 9, 2006
    Montrose, MI
    Well, I couldn't say "one man show" since I'm not a man, but I can see where you're coming from. I guess 1 person show would be more correct! The Man is just bad attitude! Need one of these for an attitude adjustment::bushmill:

    Sounds like a hairy situation with your client and I'm glad it came out your way.

    I'm considering not responding by email, but going in to talk to him in his office. It's too easy for an attitude to be taken from an email that may not really be there....
     
  18. royster13

    royster13 Very Active Member

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    You have to decide what works better for your bottom line.....No work because they do not like your terms or bad cash flow because they want terms you do not really like....I have a few client that resisted deposits and I just learned to work around it....And years later I think I have carried more to the bottom by working on their terms versus pissing them off and losing their business....But it is a very personal decision based on whether you need the work or can afford to lose it...
     
  19. John Butto

    John Butto Very Active Member

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    no deposits

    I have been working with three large corporations for over 30 years and have never had a 50% deposit and have never had a problem with them paying. Even thou people have left in these companies or retired, died, the matrix of these corporations know who I am because it trust me to do the job and pays when I bill. On most jobs they do not even ask for prices and leave it up to me to be honest with what is fair. I learn this method of business from my grandfather who used a handshake for his deposit. You may say to yourself while reading this that I do not charge enough and that is why they keep doing business with me. I keep up with what the market is charging and add if I know no one else can do it for them. I hardly ever do business for anyone else unless it is a cash job. The beancounters are all over the place and when it comes to signpeople and artists they can tell me more stories on their bad business behaviors (and from hearing some of your responses they might have a point) that they feel they save monies by not hiring people to watch over me. Large businesses have a plethora of accountants and ways to save money is their goal and in today's market that is called outsourcing.
     
  20. James Burke

    James Burke Being a grandpa is more fun than working

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    I do some subcontract work for another company, and they've given me the shaft every way possible over the years. They are on C.O.D, but I still keep them around because they are a key supplier for some things I cant get regionally.

    Lately, I've found that if I drag my heels on their work, their customers start screaming (at them) forcing them to come to me...with a check in hand.

    It seems to be very effective and it takes the pressure totally off from me.

    JB
     
  21. Locals Find!

    Locals Find! Very Active Member

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    This is custom work your doing not selling them toilet paper. I wouldn't back down one bit. Its not like you can take your work back and sell it to someone else if he doesn't pay. You need to stand your ground and tell them 50% down on a custom job balance due on completion period. I work with many major corporations in my area all of them accept my terms of payment up front on all custom work. Only two do I offer 50% down and Balance COD and they know nothing leaves my possession till I see money in my hands, funds have been paid into paypal, or the wire transfer clears.

    NET anything Terms for a custom made product is unheard of in any other industry. The fact anyone in this industry is offering customers net terms on a totally custom product is beyond me.

    Just my opinion. For whatever its worth.
     
  22. "Deposit Please"

    "Deposit Please" Active Member

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    Do you think i require a deposit?
     
  23. We make every attempt to get a 50% deposit. Sometimes we just can not. Usually with corporate clients. The bottom line here is that once you complete the job, they owe you the amount on your invoice. In all likelihood they will pay you soon enough. Bite the bullet. Get the order. Invoice the *******. In the end you'll be glad you did.
     
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