I want to let you know that I’m very pleased with the enthusiasm and effort that Tucker has shown in learning the family business over the past few months. He has shown such savvy in revising current processes and finding new business, we decided to let him deal with collecting money from our wholesale customers and distributors who refuse to pay us for the CoolZips® Zipper Pulls that they have ordered and received.
Now, Tucker is a little guy. He’s 17 pounds; fit and trim. I’m sure you’ve heard stories of small dogs or maybe have even witnessed their ferocity in action. Therefore, you would think that Tucker would be a mean SOB. And that was what I was expecting; you should see how he reacts to someone coming on our property. But Tucker is very sensible.
Anyway, as we’re learning, collections is the worst part of owning our business. It’s certainly no fun demanding payment from a person that you entered into a business relationship with, filled with excitement that they actually liked your product and viewed them as a partner in growing your business. However, as we’re finding out, some people are just dishonest and will do anything they can to cheat and steal from you.
Tucker says that if a customer is not paying their bill, for whatever reason, then they are simply not a good customer and one that you can do without.
Here are a few suggestions that Tucker has used to help us avoid collection issues.
- Ask the customer for a valid credit card to be charged before the order is shipped.
- Shorten the billing cycle from 30 days to 15 days or due upon receipt. This way, you know sooner if the customer is not going to pay you.
- Make sure that the billing terms on your invoice are visible and clear. If not, there is a good chance that your invoice will go into a stack of other invoices that will be paid only when you initiate your call for collection.
- Add a late payment fee to the invoice. If money for a customer is tight, they’ll prefer to pay the bill that will cost them the most if they are late. Again, if there is no penalty for being late, your invoice will go to the bottom of the stack.
Finally, Tucker realizes that if the person is unresponsive to your invoice, numerous follow-up emails, and repeated phone calls, then you should not be fearful that if you push collections you will lose them as a customer; they’re already gone and, with them, your product that they are profiting from without compensating you for your hard work. It’s time to turn them over to a collection agency. And if this doesn’t work, small claims court is your last resort.
In my opinion, not only should these people’s business licenses be taken away, and be prosecuted to the full extent of the law, but you should sic the dog on them. Luckily for us, we’ve got Tucker. And all I know is that I get a good night sleep knowing that he’s on guard.
