another stupid story

[Geneva Olson]

I have a big box customer. I do the graphics for an individual location. I've been doing graphics for them for several years now. SUDDENLY, they want to put me in their "vendor" system. I asked if they are a "net 30". Up until now, we have done all of their business with the GM's credit card. It wasnt an issue because it was under $5000. This new sale is under $5000 but suddenly they want me to get in their system. I was told that they can do a "net 10" but want a 2% discount. (I'm sorry, WHAT?)

So, my questions:
1 - does anyone here do net 30
2 - how hard is it to get your money?
3 - wtf kind of bs is getting a discount on money that was owed to you 10 days prior. to me that's late and there should be interested ADDED not taken away.
4 - do you increase the price to offset the net 30?

 

[Ryze Signs]

Sadly net 30 is something we just have to deal with regularly on the back end. We always require a 50% deposit even on small jobs to soften the burden of waiting for the final payment. Oddly enough the most common clients to have net 30 are national sign companies. You'd think they would understand your our needs for cash flow, but for some reason they always act like it's a privilege to do work for them.

Government and credit unions have also been terrible to work with. They're never in a hurry and the beurocracy is painstakingly slow.

 

[Scotchbrite]

I've never had anyone ask us to do the net10 discount but it used to be pretty common practice with our suppliers to us. I think 1 or 2 may still do it.

 

[White Haus]

Net 30/60 is common practice with big companies, you'll have to get used to it or risk not having any big clients. You get net 30 terms from your suppliers, right?

Most of our customer are on net 30 terms. Any flaky or new customers prepay for orders.

Order materials, get 30 days to pay your supplier. Pay by credit card, get another 21 days (or whatever) to pay.

Assuming customer actually pays within 30 days, this still results in a positive cash flow cycle.

 

[visual800]

net 30 is awesome these days, try net 45 or net 90! It is what it is

 

[Texas_Signmaker]

Net 30 used to be the norm... more like 45-60. Yes, I've seen requests for 2% discount on anything less than 10. Raise your price 5% to cover the extra time in billing and their "discount"

It's probably more effect for their accounting dept to have you set up as a vendor rather than the guy using the credit card adding you to his expense report.

 

[Gino]

We had a customer many years ago who would pay in 45 or 60 days, even though our invoice said net 30. The person at this location said, if you offer us a discount, by law, we MUST take it, if it is to be paid faster. That's the only way to get your money faster. We gave them 30 days net with a 2% discount if paid within 10 days. Worked like a charm, so we started ding it with everyone and it sped things up across the board. It has to do with dividends and investors. Don't know the terminology, but it works.

 

[Geneva Olson]

Net 30/60 is common practice with big companies, you'll have to get used to it or risk not having any big clients. You get net 30 terms from your suppliers, right?

Most of our customer are on net 30 terms. Any flaky or new customers prepay for orders.

Order materials, get 30 days to pay your supplier. Pay by credit card, get another 21 days (or whatever) to pay.

Assuming customer actually pays within 30 days, this still results in a positive cash flow cycle.

I don't have net 30 with my suppliers

 

[2B]

NET 30 / 45 / 60 / 90 (90 is our max) - do it often with established customers
* NOTE - valid CC is kept on file and the NEXT day (ie day 31) the CC is processed

yes, we offer a "discount" for quick payments, NET 5 days is our max

send the invoice when the production starts whenever there are NET terms, do NOT wait until the project is completed
* NOTE - have it stated that ANY change order is billed separately, this will allow the initial invoice to be sent when the project starts

 

[White Haus]

I don't have net 30 with my suppliers

Might be worth looking into, would allow you to carry inventory costs for clients with terms and not hurt your cash flow.

 

[Notarealsignguy]

NET 30 / 45 / 60 / 90 (90 is our max) - do it often with established customers
* NOTE - valid CC is kept on file and the NEXT day (ie day 31) the CC is processed

yes, we offer a "discount" for quick payments, NET 5 days is our max

send the invoice when the production starts whenever there are NET terms, do NOT wait until the project is completed
* NOTE - have it stated that ANY change order is billed separately, this will allow the initial invoice to be sent when the project starts

A lot of companies won't accept an invoice prior to delivery but its a good idea if they will

 

[Notarealsignguy]

Geneva, discount terms (i.e.. 10% N10) are common but seem to see less of it today. If you can cash flow it, I'd give terms but have a reasonable expectation that it turns into 60-90 days so you can plan accordingly.
These managers generally want to keep their CC balance low so it's there for things they need and can't get on an account. Typically one off things, low value purchases where a PO isn't worth the trouble and emergencies. I'd imagine maxing his P card is an issue he is running into and would recommend obliging the request or they may look to another vendor to solve the problem.
There are companies that offer factoring which is where you sell them you A/R at a discount, get paid immediately from them and they handle collections. I do not recommend this at all it its out there if needed.

 

[Geneva Olson]

The real problem I have is that many times these big box companies won't tell us until they are part way through the deal that they are net 30. With this customer, they have spent thousands of dollars with me over the years.
I probably told this story:
We had a fleet of buses we did for an assisted living facility from all over the state. Corporate was in a completely different state. They paid the first half of the buses up front but when the last 2 busses were being completed, they told us they were going to pay the balance at net 30. We stopped them and said that was never presented to us at the beginning and we didn't account for that. We held their vehicles and told them they would be paying daily storage fees until the balance was paid. Checks were overnighted to us.
At least if I am presented with it up front, I can deal with it. But even this company they presented it to me after I had already sent them an invoice. Then they told me I was more expensive than fast signs. Ha! no I'm not. But you switch me to Net 30 and I will bring my prices up to theirs.

 

[Notarealsignguy]

We always give terms to companies, it makes life easy for them and they usually turn into repeat customers. They have a system setup and you get farther going with the flow i.e. on their terms. I expect our vendors to give us terms as well if we have ongoing business, COD is a hassle.

Once you get past the first 90 days the money flows in just the same as if you were COD only. I don't recall being burnt by one in 15 years but plenty of COD walkin types have got me one way or another.

 

[Pauly]

You can always get insurance on these type of accounts. If they dont pay, you will be insured to get your money. But (depends on the insurer) it also means you wont be able to do business with them again if they dont pay or miss a payment.

 

[damonCA21]

I don't give any customers credit. They pay when the order is placed , or they don't get the job done. If I was dealing with a huge company spending thousands a month regularly I may change this, but I don't have the time or effort to be constantly chasing accounts departments to get paid.

 

[Geneva Olson]

I don't give any customers credit. They pay when the order is placed , or they don't get the job done. If I was dealing with a huge company spending thousands a month regularly I may change this, but I don't have the time or effort to be constantly chasing accounts departments to get paid.

This is where I'm at. People either pay up front, or leave a deposit. If people bring me items to decorate or wrap, I will sometimes not take any money from them up front because I have their item. But other than, I don't have the capacity to be chasing down my accounts for money.

 

[Geneva Olson]

You can always get insurance on these type of accounts. If they dont pay, you will be insured to get your money. But (depends on the insurer) it also means you wont be able to do business with them again if they dont pay or miss a payment.

why would you ever want to do business with them again if they didn't pay you the first time?

 

[Boudica]

You can always get insurance on these type of accounts. If they dont pay, you will be insured to get your money. But (depends on the insurer) it also means you wont be able to do business with them again if they dont pay or miss a payment.

Is this just an Aussie/Euro thing? I've never heard of insurance for unpaid accounts. Does it get you paid in the event your customer files for bankruptcy too?
a local design agency that we did some projects for went out of business, I guess they still owe us money, but we will never see it.

 

[Geneva Olson]

Is this just an Aussie/Euro thing? I've never heard of insurance for unpaid accounts. Does it get you paid in the event your customer files for bankruptcy too?
a local design agency that we did some projects for went out of business, I guess they still owe us money, but we will never see it.

it sounds like a lawyer on retainer