Accounting For Skip Accounts: What To Do And Not To Do

We all have to contend with customers who don’t—or can’t—pay us. Most of them are good people who may occasionally encounter monetary problems.

We hate to do it, but sometimes it’s better to take product back to reduce or eliminate their bill. It’s an unsavory task, but in the end, both the customer and tool distributor benefit. The true last resort is the forced repossession of product. I want to devote this column to a discourse on the different aspects of these situations.

Another tool distributor once gave me a list of typical excuses he compiled as to why a customer could not pay him that week. They ranged from “I needed parts for my racecar,” to “My hours are really down this week,” to “I just bought an ATV—want to see it?” to “I thought your day was tomorrow.”

Each excuse was assigned a number and if I felt comfortable with the customer, I would say, “You are using number six this week.” They would go, “Huh?” And then I would show them the list. We would both have a laugh, but it also provided me with the opportunity to re-establish my terms in a non-confrontational manner. Even after 26 years in the business, I still believe in the honesty and character of our clients.

Sometimes circumstances change that make it difficult for our customers to comply with the terms we both agreed to at the time of sale. I detest taking product back to reduce their bill, but there are instances that warrant it. It kicks your numbers for the day and is as pleasant as chewing tinfoil.

I explain to the customer the door is open for future business, but I also relay to him that this is the equivalent of a “comeback” for me. Just like the tech who has a comeback and gets to do all the work again for free—the return of product is a bummer for the tool distributor. Techs can relate to these terms, and hopefully in future dealings, we would both be more circumspect with regard to buying decisions. If the customer is truly no good, get what you can back and indicate your dealings are over unless he pays cash. You don’t need to get nasty, though, unless he’s treated you shabbily.

The world of repossessions is complicated and governed by legal issues. Each of the major mobile tool companies has an extended terms contract that charges interest for larger purchases. One must follow the laws of each state, and I would respectfully suggest adherence to these legalities. The department that handles “repos” is your source for guidance and compliance.

This draws to mind several situations that have occurred on the street that just aren’t right. I’ve had customers who have lost their jobs or were unable to work for extended periods of time. Their toolboxes stay at the last shop they worked at, and you do your best to gather information on their status. One week you roll into the shop, and the box is gone. You figure he picked it up, but later you discover another tool distributor “repoed” it.

I have nothing against a businessperson trying to recover his merchandise, but keep your hands off what doesn’t belong to you. I’ve experienced situations in which other distributors not only take their product, but mine, too! Take what you need to make yourself whole, but you OWE it to other tool dealers to call and let them recover their tools if a balance is owed. You have no right to take tools of theirs or the company they represent: They may be on contract or have an outstanding balance.

Let the customer keep the product he’s paid for, and it’s your responsibility to secure it. Don’t look at this as an opportunity to make extra profit by selling everything he’s acquired over the years. If you do that, you are nothing but a thief. Immoral, indecent, reprehensible, shameful—you get my feelings on the subject. My opinion is if I didn’t sell it, I have no right to it unless the customer and I agree to it, and there is no balance owed on the product in question.

Don’t try to get back at your competitor by mistreating the customer. If you derive pleasure from knowing one of your competitors is losing money by your actions—you have a serious character flaw and soil the reputation of us all, not to mention how you’re violating the customer’s interests. There is serious competition on the street, but each of us needs to make a living. It’s no fun to see someone else get the sale, but your disappointment doesn’t give you license to strike back.

Earlier in this column, I indicated I believe in the honesty and character of our clients—I expect us, as mobile tool distributors, to stand on even higher moral ground. You should be able to look everyone in the eye when doing business. Be a pillar of integrity and fair play ... After all, isn’t that what you want and expect from your customers?

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