50% Deposit

[CentralSigns]

You know what pisses me off these same big companies are showing huge profits on your money, they collected interest on the money over the 30 day term you gave them. They want 30 days, I say deal with the credit card companies, they are in business for that.

How long will it take or how many customers not giving a deposit will it take to tap out your money to the point that you can't take on any more work. We had that happen several times, net 30 days, a couple grand in materials on 4-5 different projects. The customers slow to pay dragging it out to the 30 days and wham we can't buy any materials to do any more work. We tapped our working capital. Never again do we sit with no working capital to buy materials for the next job.

It's all net 24 cause if they don't pay by then, its a construction lean and we always take 60% on anything over $100. Sometimes you got to stand up to these companies to get some respect from them. So far we are still growing so it can't be affecting our business that much. Just some thoughts for you.

 

[CheapVehicleWrap]

The last thing anyone wants to do is OWE me money, because I'll cost them 100+ times more than they originally owed and just forgive the debt. The world is full of these sockcuckers so always cover thy arse in as many creative ways as possible.

 

[john1]

I guess this is the cons of dealing with corporate companies. I honestly have only dealt with a few since i am so small currently. I like my money on time and 50% down lol

 

[Locals Find!]

I guess this is the cons of dealing with corporate companies. I honestly have only dealt with a few since i am so small currently. I like my money on time and 50% down lol

John, This isn't about dealing with corporate companies its about people in an industry selling a custom made product like its something that can be picked up at wal-mart.

This industry has got to stop giving people terms period. These corporations can borrow money if they don't have cash on hand for capital. Anyone wanting to pay you 30 days out is telling you they have no working capital. So why would you want to loan them your money so they can run their business?? Your not going to get any interest on that loan. Your basically giving them a 0% loan for 30 days. Try going to your bank and asking them to give you a $1000 loan for 30 days with no interest or fees. Let me know how hard they laugh at you. Banks are in the business of loaning Money not Sign Shops.

#1 reason businesses fail no working capital. #1 reason businesses have no working capital they loan money to another business interest free.

 

[astro8]

It's 50% down and payment on completion. I don't care who they are. Only exception to this rule is we have some national and multi-national companies that pay no deposit but are on strict 30 days and they pay up on time, everytime. One company has been with us for 25 years, another about 10 years. If they ever slip up they'll be put back on the 50% deposit rule or maybe even go to the 100% upfront rule if they get really sloppy.

Stick up for yourself. Don't let them dictate the rules of your business.

Most companies have their terms and rulings, blah, blah, blah but it's amazing how quickly they come up with the money when they really want something.

If they stuff you around, they're not worth it, move on and let some other sucker finance them. There's better pickings elsewhere.

Forgot to add that the reason some of our companies are on the 30 day account is that they pay a premium. Make it pay for you.

 

[John L]

Just respond... YO MOMMA!

 

[royster13]

For me it is about building in an adequate margin to carry accounts...So I do not think I am giving them money for free.....They pay me well for the service I offer...

 

[Techman]

wait till one stiffs ya for a grand or more. . Then all that extra profit will be eaten up.

 

[Slamdunkpro]

I took the "best defense is a good offense" approach. Our credit app is 8 pages long and is a "best of" compilation of large company credit apps. It asks for lots of of personal information, including contact info, personal credit history and liabilities for all the officers, and all kinds of corporate info. There's also 2 required personal guarantees, one of which had to be a person residing in Virginia so we can go to court locally if need be.

All the terms are in the fine print including interest for past due(50%) and provisions such as if one invoice becomes overdue the entire balance is immediately due, collectable and subject to interest and late fees (hey it works for the credit card companies). It's all been vetted by our lawyer and is enforceable.

We someone asks about terms I smile and ask if they've filled out a credit app. When they say no, I give them ours and tell them to fill it out and return it, then we will process it. It takes 10-14 business days to process. At that time we'll let them know that, if approved, what their credit limit is. Until then, we require a deposit and payment on delivery. One of the terms in the agreement is that we do not bill for dated material since we have no remedy once the date of the event has past.

If they leave anything blank, it gets marked and returned with a nice "Please completely fill out the credit app so we can process it - thanks" note.

They usually settle for deposit and pay on delivery or credit card billing once they get a chance to read about halfway through it or we've sent it back as incomplete 2 or 3 times.:Big Laugh

 

[signmeup]

I took the "best defense is a good offense" approach. Our credit app is 8 pages long and is a "best of" compilation of large company credit apps. It asks for lots of of personal information, including contact info, personal credit history and liabilities for all the officers, and all kinds of corporate info. There's also 2 required personal guarantees, one of which had to be a person residing in Virginia so we can go to court locally if need be.

All the terms are in the fine print including interest for past due(50%) and provisions such as if one invoice becomes overdue the entire balance is immediately due, collectable and subject to interest and late fees (hey it works for the credit card companies). It's all been vetted by our lawyer and is enforceable.

We someone asks about terms I smile and ask if they've filled out a credit app. When they say no, I give them ours and tell them to fill it out and return it, then we will process it. It takes 10-14 business days to process. At that time we'll let them know that, if approved, what their credit limit is. Until then, we require a deposit and payment on delivery. One of the terms in the agreement is that we do not bill for dated material since we have no remedy once the date of the event has past.

If they leave anything blank, it gets marked and returned with a nice "Please completely fill out the credit app so we can process it - thanks" note.

They usually settle for deposit and pay on delivery or credit card billing once they get a chance to read about halfway through it or we've sent it back as incomplete 2 or 3 times.:Big Laugh

I like your approach.

 

[signmeup]

I just received a check for $3500 from an insurance co. contractor. Big outfit... "preferred contractor" the insurance adjuster claimed. It took 90 days before I saw my money. They gave me the run around a number of times. I'd "prefer" not to deal with them again... unless they pay me upfront.

I can see that I will need a "terms" contract for future jobs.

It's a real problem with not getting down payments as I get more jobs on the go. I did have to use my credit card to finance sign jobs because I didn't have enough working capitol for everyone. That cost me money. Maybe I should mail them a bill for late fees and interest.

 

[royster13]

So will you make more money on jobs you drive away versus waiting 90 days for your money?.....When I was as insurance adjuster I had more contractors asking for business that I knew what to do with....So when they came up with terms that did not work for me or my principals, next!....

 

[signmeup]

So will you make more money on jobs you drive away versus waiting 90 days for your money?.....When I was as insurance adjuster I had more contractors asking for business that I knew what to do with....So when they came up with terms that did not work for me or my principals, next!....

That's what I just said.

 

[iSign]

So will you make more money on jobs you drive away versus waiting 90 days for your money?.....When I was as insurance adjuster I had more contractors asking for business that I knew what to do with....So when they came up with terms that did not work for me or my principals, next!....

Your arguing with yourself here?

You promote financing clients over demanding the security of 50% deposits, and claim that alternatives drive away business, for a net loss...

but then you claim you set your own policy, and all others take a hike?

I challenge the first, and support the second... Techman is right... pull in a few more jobs a year by acquiescing to client financing demands... and maybe you see increased profit... until you get stung!

 

[royster13]

Those on the receiving end have the most to lose when clients take their business elsewhere....

 

[Techman]

Those on the receiving end have the most to lose when clients take their business elsewhere....

Run your business via statistics. Then you can measure what is right or wrong.
Know the average client value.
Know the retention quotient.
Know how many phone calls lead to a sale.
Know it all and measure it all.

Then when someone comes in and tries to Buffalo you into some scheme contrary to your instincts you can run them down the road and never again fear losing a client.
You can start setting prices that match your needs.
You can run your policies that match your needs.
And you can tell those low ball asking clients that you do not have time to play lets bid for the job.

 

[Slamdunkpro]

Those on the receiving end have the most to lose when clients take their business elsewhere....

I'd rather have $5000 in hand than a questionable promise of $25,000 in 90+ days.

 

[Locals Find!]

For me it is about building in an adequate margin to carry accounts...So I do not think I am giving them money for free.....They pay me well for the service I offer...

Your basically saying your prices are too low on customers who pay upfront and your loaning money out for FREE to large corporations who ask for it.

Those on the receiving end have the most to lose when clients take their business elsewhere....

royster you make no sense. How is a sign shop going to make money loaning out their capital for 90 days?

When someone like Signmeup or anyone else has to dip into their personal credit to keep the lights of the business turned on. That means they just lent their working capital to a business that couldn't be bothered to have or use their own working capital.

Any accountant who paid attention in school will tell you NET TERMS of 10,15,30 or 90 days are for wholesale accounts only. The whole idea behind those terms are to allow manufacturers of a product the ability to purchase needed supplies to manufacture a product to sell. Giving them adequate time to produce and sell the finished product and pay for the supplies. If those big corporations don't have working capital to afford their signs then they need to go to a bank or finance company and look for a loan. Not ask the sign shop to loan them money interest free.

 

[royster13]

Signs shops make their money on the margin they make on their sales....No sales, no margins....So I do not think it is wise to drive away sales....But to each their own versus their personal needs...

As far as my margins, they include enough for those that take time to pay me....And if I get paid up front, that is a bonus that I will take.....

The cost of capital is almost diddly squat these days.....I only pay 6.8% on my line of credit....So for each 1,000.00 I have out for 90 days it costs me about 18.00....
Last year I paid about 3.41% on the credit card payments I took....I can carry a lot of A/R for before it costs me more to finance the orders versus what I paid my credit card processor for those that pay by credit card up front.....

 

[iSign]

Until that $5000 AR from a business about to tank (& there are a lot of those these days) ends up never coming in... and tweaking all that smug math in a heartbeat!