It completely baffles me that some people just don’t seem to understand the concept of paying for a product. If you took the tool home and are using it in your business, then it’s yours and you need to pay for it. It’s not something you borrowed from a buddy to test out, it’s not something you can just pay 75 percent of and feel like that’s good enough, and it’s certainly not something you can flat out skip on paying. Yet people do this — all the time. According to our Professional Distributor reader survey, collections are a critical issue for 61.6 percent of readers.
So, how do you get paid? What are your methods for collecting? How long do you give your customer to pay up? When do you repo?
Now, I understand that sometimes extraneous circumstances arise that make it suddenly very challenging to your customers to pay for the tools they purchased. For example, one mobile tool dealer told me that during the height of COVID-19, he dropped the required up-front cost of his tools. While he normally requires 50 percent down, he decreased it to 25 percent during the pandemic. He was able to do this because he trusted his customers and knew they would pay him back — and they did. But you need to really know your customers and only offer deals like this to the ones you trust will make good on their word.
Unfortunately, life is always throwing us curve balls and if your customer is suddenly experiencing financial hardships due to unexpected life events, it doesn't mean they can cause financial difficulties for someone else — their tool dealer, for instance — who is also trying to put food on the table for his family. In fact, that’s the tactic of one mobile tool dealer: When a customer is having a hard time paying up, he pulls them aside and has an honest conversation with them about how if they don’t pay, it takes away from him being able to provide for his family.
Matt Sledge, a successful independent mobile tool dealer, says skips aren’t a big problem for him because he is always working with the customer to help them understand what they can and cannot afford.
“I’m more of a regulator,” he says. "'I know you owe me $500. If you buy this you’ll be at $800 and now you’ll need to pay $70 per week. Do you want to make that decision?’ So I have to talk to them and ask them what their financial situation is. Ask if they can afford it, and sometimes they put that product back on the shelf.”
Read Alan Sipe’s column here for advice on dealing with skips.
I have never ran my own business and can’t imagine how stressful and difficult it must be to be constantly chasing people for money. I had a hard time just getting a few friends to pay me for a weekend away! I give you all a ton of credit and encourage you to keep in mind that you may be buddy-buddy with your customers, but when it’s time for them to pay up, don’t be afraid to be stern and tell them you expect to be paid.
