I’m having collections problems. A lot of my customers are starting to fall behind and I have some dead beats I can’t catch up with. What should I do? You don’t want to hear this, but if a lot of your customers have fallen seriously behind, you first have to realize there’s only one...
Welcome! This content is housed in a special section of our website designed for mobile tool distributors selling tools and equipment into the automotive aftermarket.
Articles written for mobile distributors are now only accessible with a unique login, to ensure this information stays exclusive to the mobile distributor community and isn't available to the public.
By registering to access this special section, you get full access to all of the content in VehicleServicePros.com magazine, along with exclusive online content that gives you an inside scoop on hot new products, exclusive stories, sales tips, technical information and more!
You will also need to be a qualified subscriber of VehicleServicePros.com to gain access. Subscribe to VehicleServicePros.com now or have your subscription ID ready.
It only takes a few minutes to register and verify your credentials. Register only once and simply use your login information when you return.
Login now to access exclusive content and learn more about how to make your mobile tool distribution business more efficient and profitable!
I’m having collections problems. A lot of my customers are starting to fall behind and I have some dead beats I can’t catch up with. What should I do?
You don’t want to hear this, but if a lot of your customers have fallen seriously behind, you first have to realize there’s only one person to blame: You.
‘I can’t blame them,” Cincinnati-area Mac Tools Dealer Bruce Holsinger says of his customers who are behind or delinquent. “It’s my fault. I let them get to that point.”
That doesn’t mean he lets them off the hook. It just means as a 20-year mobile veteran, he realizes it’s his responsibility to keep them from getting to that point. And once they’ve got to that point, it’s his job to get them back on track.
The consensus among top dealers and trainers is that good collections all pivots on starting off on the right foot. As Mike Boyhan said in the August 2012 Sales Q&A column (www.vehicleservicepros.com/10739333), it’s all about covering your bases upfront when you begin working with a new customer so they know what’s expected.
Get Information Up Front, You May Need It Later
Holsinger, for example, makes sure he gets every piece of information he can when he first opens a new truck account. He asks questions that might seem a bit invasive: Do you have a wife or girlfriend? What’s her name? What’s her phone number?
Holsinger says if the customer mentions a dad, uncle or brother he asks for their name and number too. Never know when it might come in handy.
Some customers may balk at these somewhat intrusive questions. But just remind them they’re in essence applying for an interest-free loan. If they were applying for a bank loan, they’d be asked many more personal questions. Heck, I was asked to supply a reference and phone number when I applied for a library card several years ago. Really. For a library card!
Why does he want this information? He may not call them as a reference, but if a customer starts dodging him, Holsinger is not above calling a wife, girlfriend or family member to try to collect his money.
A Truck Account Is A Privilege
Holsinger is among the best collectors in his region. He says his secret isn’t quite that secret.
He makes sure he tells customers his payment policy upfront, and reminds them that having a truck account is a privilege. If they want to keep that privilege, they need to hold up their end of the deal.
He doesn’t just do that when he opens a new account, he gives his 15-second speech nearly every time he closes a new sale. This reminds the customer and everyone who overhears him that Holsinger is dead serious about getting paid on time.
In fact he recites his payment policy so often, he has customers that have it memorized and will recite it to new customers on the truck, often giving Holsinger a chuckle. (See “Holsinger’s Payment Policy” sidebar.)
Watch For The Warning Signs
It’s important to know the red lights that a customer is likely to fall behind and to keep them in check before they are seriously delinquent.
“He’ll start to dial back his payment,” says Holsinger. “When a customer says ‘I’ll be $10 short this week,’ you’ve got to be sure they know you expect that $10 next week.” Otherwise, you’re leaving the door open to more weeks when he’ll be $10 or even $20 behind. Once a customer begins to fall too far behind, it becomes next to impossible for them to catch up. He could end up more than just behind on payments, he could start avoiding you altogether.
In the same way, avoid selling a customer more tools while keeping the payment the same. In either case, you’re putting your cash flow at jeopardy. It doesn’t matter if they can only afford $25 a week, if he wants more tools, he has to come up with more money. Or he has to wait until he’s paid up to add that shiny new tool to his box.
Get what you want from them by pestering them the way they do to you when they want a tool
Change-up your routine to catch a "skip" off guard
Future "skips" start sliding early...Catch them first!