Sales Tip: Understand the cost of skips

Let's look at the issue of skips financially. You sell a product for $145 with $30 down. Your receivable is $115. Granted I am using estimated cost and profit numbers, but you will need to sell about $500 just to cover this loss. So, for every buck you don’t collect, you need to sell about $4.50 just to break even. 

• Sell price: $145 
• Cost of goods sold: $87 
• Gross profit: $58 
• Estimated operating costs etc. (25%): $14.50 
• Net profit (NP): $43.50 

• Sell price : $145 
• Down payment: $30 
• Receivable: $115 
• Customer skips, amount lost: $115 

• Sales needed to just make up the loss: $383.33 
• Lost NP on $383.33 of sales: $115 
• Sales needed to get whole: $498.33 

Collections are a “not fun” part of a mobile jobber’s work but of the three best ways for you to go out of business, receivable write-offs are right up there with not making your calls and not asking for the order.  

When you “tote the note,” you are functioning as an independent lending bank or credit card company and the first thing a bank does is make sure they know who they’re doing business with. As you know, a bank will not lend you a dime until they know just about everything there is to know about you including your shoe size. How about you? When a new technician shows up at one of your stops, do you do your due diligence on their creditworthiness before you trust them with your money?