Balancing Cash Flow With Customer Relations

[phanio]

My problem is that I like to treat people like I want to be treated. I will not pay an up front fee - period. Just my stubbornness. However, I have never not paid or paid late in my life – for anything. Makes it hard for me to ask for an up front fee as I won’t do it. I don’t mind paying in the middle – provided there is some defined and measurable event. But, I like to see what I get before I pay (and, I will pay).

Regarding credit cards – unless you run the card right away for approval, you don’t know if the card is bad, closed, or overextended – do I have this wrong. Plus, the costs (while not nearly as bad as a no-payer) are still huge.

I went to a Chevron station the other day to get gas. They charged my card $125 before I even pumped gas. After I pumped, I received a second receipt for the correct amount. But, the $125 showed up on my transaction history for a few days, until the Chevron batched and sent in the receipt. While everything worked out in the end, it was nerve racking waiting for the charge to be adjusted. Now, I will never go back to that Chevron station – even if their gas is $0.50 per gallon.

Maybe just have to change with the times. Ask for up front payments when times are good and not worry about it when times are bad. From what I get from this discussion, is to set up a process in the beginning and stick with it.

[huggytree]

yes i want to cut out the late payers.

but id rather have late payers right now than lose $75k in work in 2009

I need to make that $75k so i can help the goverment right now..without it they will lose $30k in taxes....i need to do my part

anyways.....i know of a credit card processing company which sets up a whole program for this situation...i hire them to handle it....they have experience with it..yes i will lose 5% or so....

in good times id dump these guys.....in bad times getting worse ill take precautions and cover my *ss and keep them....when i get busy they are the first to go....

new customers have completely dried up right now (typical for middle of winter in WI). If i dump them i cannot replace the income...i am still only working 100 hours a month on average..im not close to compasity.....this month its down to 75 hours in the field, next month im expecting 40(typical for Feb in WI-same as last year)

one of the late payers right now has always paid on time in the past...should i dump him for 4 on time payments and 1 late?.....he will dump me when i start sending him legal letters and contacting the homeowner....in 2 weeks thats whats going to happen.

[Vivid Color Zack]

The best way I've been able to lessen the problem of late payers has been our online payment system. For printed goods most companies are used to paying 50% up front, or COD. When they purchase goods online they are used to paying 100% up front, that's just the nature of ecommerce. Now more and more of my clients are using this system adn the only trouble I ever run into with late payers is from clients I acquired before our web site was functional and are still paying us COD because that's what they are used to doing with us.

Though we do have a nameless client out there who still owes us a few grand that we've completely written off as gone. They've shut their doors and the owner is bagging groceries to feed his family. I don't have the heart to chase him for it.

[phanio]

huggytree - you stated "anyways.....i know of a credit card processing company which sets up a whole program for this situation...i hire them to handle it....they have experience with it..yes i will lose 5% or so...."

Can you expand on this a bit. Do you take a cash advance and then let them collect? Or, is it just part of their service as a processor? Are they good at collections? 100% - 90% - 80%? Do they anger your customers?

Sorry about all the questions, just interested.