50% Deposit

[Locals Find!]

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.....

Your going to have to explain to me how you did that math. 6.8% of interest per $1000 is $68 interest. Your math doesn't add up. So for financing those clients $1000 for 90 days you paid over $218 in interest. Assuming your credit card company calculates interest like every other credit card issuer in the world that is.

So Tell me again how paying out $31.40 for accepting the credit card isn't better than paying $218 in interest. Now I am no CPA but, My Math teachers in school did manage to learn me that $31.40 is less than $218 any way you look at it.

 

[royster13]

6.8% (0.57% per month) on 1,000 is 68.00 over a year.....Over 90 days it is about 18.00....

 

[Slamdunkpro]

I like your approach.

Funny story - Capital One called and wanted some work done, I sent the quote and it was accepted. Spoke with the guy in charge of the project and mentioned the deposit. His response was "bill us when the job is finished". I did the whole credit app speech and he took the app and left. Called back the next day saying there is no way in hell any sane person would sign this specifically alluding to the "if any invoice goes overdue the whole account can be called due at our discretion" clause. When I mentioned that that clause was lifted word for word out of one of Capital One's loan agreements there was a long uncomfortable silence followed by "can I give you a credit card for the deposit?"

 

[deegrafix]

Thanks for all the great responses.

I've done work for big companies that didn't pay deposits, like the US Government, and it was always stressful, but you know the terms going in and have other work going on at the same time propping up the bank balance.

This company pushing on me now is one I've done business with since they opened their doors in 2003 with 11 people, and before that I had done graphics for each of the owners through a different company (same type business), since 1992, always with 50% deposit and payment on completion.

Earlier this year they made a mistake quoting graphics on a contract for a bus and asked for help and I gave them a $1,800.00 discount on a 4K job. They have one location, one office, and I've known them going on 20 years. They know I'm a one person shop that practically went under with them last year.

The financial partner tries periodically to put custom graphics in the same category as suppliers of nuts and bolts and wire and implies he is doing me a favor at our current terms and likes to make sure I know some vendors are at 90 days. I thank him and continue to assume the same terms. He's never officially put me on 30 days, and my invoices always state payment on completion so I'm doing him a favor waiting for the final. I think that some days it bothers him worse than others but I know I'm not the only sub on these terms and he tries the same thing with one other that I know of. Still, it's a ticklish situation and even after 20 years everyone is replaceable......

The other partner would never think of replacing me but he's not the one I have to deal with on a daily basis.

I hate to poor mouth my own company, but a majority of the time I simply can't afford to bankroll their jobs, (Lot's of 3M reflective and many wraps on BIG trucks) and have to resist no deposit with all my energy!

Thanks for listening!

dee

 

[andy]

Adtech has covered all the relevant points very well.

If you love sleepless nights, gut churning stress and phone calls from debt collectors by all means shower your customers with as much interest free, un guaranteed finance as you can. Get 10 credit cards and max them all out. Setup accounts with all the suppliers you can find and spank them without mercy.

In a couple of months you'll find the odd customer has gone bust leaving you liable for all the materials you bought in. Many others will spin out payment for 120, 160 or 180 days... meantime the credit cards are all on stop and your suppliers and drawing up court papers.

Six months later your business is dead... all your assets have gone, sold to pay your creditors who ran out of patience and weren't prepared to be as generous with their money as you were with yours.

Interest free, un secured credit has been great for your customers.. they offer the administrators of your now defunct company 15p in the pound and it's accepted, wiping off 85% of what they should have paid you. You? well you've got no business and no assets left... still, your ex customers think you're a great guy... they'll miss you... for about 4 minutes after which they'll forget all about you.

I don't give credit to anyone and don't ask anyone to give me credit.... I sleep like a baby every night.

 

[FrankenSigns.biz]

I have been in business for 30 years.
I have extended credit to THOUSANDS of individuals and corporations.
I can count the number who never paid me on one hand.

 

[Techman]

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...

It's not driving away sales. You do not have time to deal with speculating. You should not be a commodity.
If you run a business from an effective model plan.. And cater to those only who fit your profile,, then there is no worry about driving away sales. There is no such thing as driving away sales when you do qualified specialty work. You should not care one iota about any one outside your profile. Let them all self disqualify.

 

[Fred Weiss]

Your going to have to explain to me how you did that math. 6.8% of interest per $1000 is $68 interest. Your math doesn't add up. So for financing those clients $1000 for 90 days you paid over $218 in interest. Assuming your credit card company calculates interest like every other credit card issuer in the world that is.

So Tell me again how paying out $31.40 for accepting the credit card isn't better than paying $218 in interest. Now I am no CPA but, My Math teachers in school did manage to learn me that $31.40 is less than $218 any way you look at it.

6.8% is tha APR.

$1000 x 6.8% / 12 = $5.67 monthly interest charge

$5.67 x 3 months = $17.01

Sounds like less than paying out for a credit card is more to me.

 

[Techman]

I have been in business for 30 years.
I have extended credit to THOUSANDS of individuals and corporations.
I can count the number who never paid me on one hand.

Have you ever been stiffed for more than 5 grand?

 

[ProWraps]

they cant pay $2k up front, and the d*psh*t is asking you to mind your capital? i piss $2k. give me a break (and im a one MAN shop).

id tell him to shove his pocket protector up his a$$ and walk. if you are doing large jobs like you say, and this dinkus is giving you jobs for only $2k why bother with the headache. NEVER let the length of time you have had a client DICTATE what you put up with from them! i dont care if he has been your client for a majillion years.

the reality of it is, some clients wont pay any deposit. they are typically the larger ones. i have over $40k on terms right now with no deposit and almost $80k outstanding. stressful? hell yea. but a daily occurence i live with, of course.

its the jerks that respond like the one you posted that get the short line to the f*ck you bin.

 

[4R Graphics]

I have done work for a few clients that are large firms and dont pay deposits and often dont pay out for 60 days. the way I found to work around this if you know the company has the money but you may need to pull teeth to get it is.

A contract I have a contract drawn up that has sections that can be written in and the client initials next to them.

Basically what the contract says is that you have until X day (90 days) to pay or I file in the court system for the payment. You the client agree not only will you pay me the amount do but you will also pay me the interest that amount would have made since the day the job was finished Based on X index. As well as all attorney and court fees I am charged in order to get the money you owe me.

When I break out the contract and they read it I usually get a deposit check but sometimes they sign it but I have never actually had to inforce it.

Dont let them tell you how you do business.

For us we have the money to cover the job but we still charge a deposit its to make the customer commit and not waste my time doing anything just to have them say we decided not to do it right now.

There was a link to a video in some post here not that long ago about this kind of stuff the name of the video was F$#k YOU pay me. Really good info

 

[TND]

We require a 50% deposit on all orders no matter how bi or small most people just pay us in full, and for those who do they get moved to the top of the list and they become our priorety all my clients know this and more and more have been paying in full.

 

[Sign-Man Signs]

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

I agree Joe. I started doing Pre-Pay the first of the year. Hasn't hurt me at all. I do give a written guarantee when their project will be completed and if we fail, complete refund. Haven't paid anything yet.
I did have our local City refuse to pay and they passed on the project. In the end, it cost them more from another company, all most twice as my quote due to "policy". In these days and times, I have to get material costs first before starting any project.

 

[royster13]

Sign Man how do you know it has not hurt you?....Oh I know!....All the folks that do not use you pick up the phone and call you to tell you!....

Do you get 100% of the quotes you make?.....If you do, great.....But perhaps some that you do not get are because of your terms....

 

[iSign]

royster, you could actually learn something if you got off that high horse for a minute...

here's 2 life lessons for you..


NUMBER ONE: If you get all your quotes.. YOU'RE TOO CHEAP, (and maybe too generous on policy as well)

NUMBER TWO: If a vast majority of professional peers are in agreement on a policy your are not in line with.. MAYBE YOU AIN'T DONE LEARNING ALL THERE IS TO KNOW ABOUT HOW YOU RUN YOUR BUSINESS YET! (and maybe you can take advantage of the best this site has to offer, by being open to the valuable lessons available when you realize you don't know it all already)

 

[royster13]

I have been in business 30+ years and I do just fine.....I am not hurting and I do not have an A/R problem.....

As far as getting 100% of the quotes....I agree if you are getting 100% you may have room to increase your prices......

 

[Joe Diaz]

To us down payments are also an earnest payment. It's a trust thing that goes both ways. A client that is serious about having us provide them a services by making an earnest payment, will never back out when they have made a financial commitment. Those that are unwilling to do so end up going somewhere else. And that is okay. We can't nor do we want to do every potential job that comes in the door, especially for those that are unwilling to trust us and meet us halfway (or part way on jobs under $300).

 

[john1]

Well said Joe, I am dealing currently with someone who met with me for a meeting. I asked for 50% down to get started and he said "How do i know your not going to take my money and close up tomorrow, I don't know if your a real business or not". This guy was referred to me by a customer of mine so idk where his thoughts of this came from. Later that day he calls me and says "i'll send you out a check next week, If anyone falls through i can always cancel it through my bank".

Trust is everything in any aspect of life especially a business relationship.

To this day about 6 months later he calls and emails me trying to set up a meeting every once in a while at his place now and i continue to refuse to do business with him. You don't trust me and then insult me, Well your no longer getting my attention. Just go to another sign shop, They are everywhere these days.

About the waiting for a payment deal, 50% down covers your butt as far as materials and part of your time and I really wouldn't do business with anyone that would make me wait over 30 days for the other 50% of the total. I mean if it's a established company i would have more trust i would get my money than some company i never heard about. I mean your family doesn't wait out being hungry and the needed supplies so maybe explaining why getting your money in a timely fashion is important will hit home to some and turn them around.

 

[iSign]

sure you can explain "why" if you want...

here's why: "our policy is half down, half on completion"

done explaining!

(I wouldn't tell them it's because I can't afford sh!t without timely payments... even if it was true... which it often is...)

 

[fresh]

Requiring a 50% deposit on all jobs has made our lives so much easier. We only have to look at about $1K worth of completed work never picked up not to cave on customers who want us to do work for free. Yes, we have a handful of customers who we will do work for without a deposit, but only if it uses materials we already have on-hand, and they always pay in full on delivery. Also, if something is left in our shop for over 30 days (even if there was a deposit left) their file gets taped closed... If they want anything else from us in the future, its 100% upfront.

When someone says "what if I don't like your design" I suggest they review our portfolio if they are concerned about our abilities. If they think we are going to run away with their money, I suggest they pay by credit card. We don't sweat the people who want layouts for free, they probably want their signs for free, too. We aren't a charity sign shop.