Show Me The Money!

26 Mar

Bringing the money in can seem scary for many.  In truth, unless there is a question of adds or service quality or service timeliness, collections is nothing to fear.  Treat it like you’re making sure there aren’t any outstanding issues.  You’ll never get blindsided and the customer will never get amped up.

I have literally made thousands of collection calls over the years.  The process is very basic.  When they don’t pay, the process needs to be defined and you need to be disciplined about following the process.  Know your process for escalating the issue and don’t compromise the process.  Especially if you are a small business and can’t afford to carry the receivable or worse yet write it off.

Your credit terms will likely be industry specific.  If you’re business doesn’t carry receivables, consider yourself lucky and focus your extra time on marketing and operations.  I am in a made to order business.  This means you are buying something very specific to your needs.

1) For special order items, charge prepayment for smaller orders.  In our case for orders under $500.

2) For orders over the threshhold, charge 1/2 Down, Net COD

3) Collect your COD’s

4) Know your cut-offs – product in versus product out

5) If you can’t get it out, bill it in time for the customer to pay it  when you need it

6) Some positions in an industry can afford offering discounts; match the terms to the need

7) Our position in our industry, provides for Net 10th terms

8) Develop a routine to communicate with your customer

9) Follow it

10) Be the nicest, most focused collection person

11) Don’t be afraid to show up

12) Wife’s can be deal makers or at least force the communication

13) So can collections

14) Realize lack of communication generally doesn’t mean unwilling to pay, but rather unable to pay without a timeline

15) Document every call you make to your customer

16) Know at least 2 contact numbers

17) Google the mailing address to make sure it is not a post office box of some sort.  You want a physical address.

Getting Creative

26 Mar

Sometimes stuff just happens and you have to get creative.

Creative really means, anything but business as usual.  The situations we have come across made me wonder if we just invented stuff.  Sometimes I felt if these were patents, we would be rich.  It’s not that we don’t make customers happy; for we have many many surveys from extremely happy customers.  It’s not that we lacked experience; for we have some very experienced people.  Many of our customers are repeat customers.  Sometimes stuff just happens; now what?  What are you going to do now?

1) Keep cool – so you can stay focused on the solution

2) Know where your resources are – so you can assign assets and people to roles

3) If a customer is involved, make sure empathy and taking appropriate ownership is evident

4) Make sure you have systems in place – this means redundancy of 3-4 deep

5) Know when the stuff needs to be resolved – What’s your deadline?

6) Lastly, in reviewing the situation you may realize following your gut instincts can often prevent stuff from happening

Controlling Your

26 Mar

Controlling what you pay out to your employees and vendors is one of your most critical activities. Vendors can be a little forgiving. Employees? Not so much. My experience has taken me down a long and winding road.

1) When filling out a credit application, try to avoid signing the personal guarantee.
2) Pay early to get your discounts
3) Pay on-time
4) If you’re falling behind, you need to make some difficult decisions.
a) See revenue
b) See fixed costs
c) See variable costs
d) Prioritizing your vendors
5) The clock can only tick for so long

Insurance Issues

25 Mar

I have never been a fan of insurance.  Of course you can’t go without it, but it seems to operate using it’s own set of rules.

Make sure your agent is working for you.

Get competitive bids EVERY year.  You’ll need access to your loss history and your current agent is likely to drag their feet getting you a copy.  Insist on it.

One year, we learned within about 1 week of renewal they we weren’t going to be renewed.  Nothing we did, just our carrier’s priorities changed.  We suddenly went into scramble mode to get bids FAST to insure continued coverage.  Not to ever get caught empty handed, we committed to getting multiple bids every year.

How’s your deductible?  Our deductible is $5,000.  I recently learned this may not be for the best.  In general, I will deal with my issues without looking to insurance.  I have found where I had no control over the matter.

Once we had an apartment where we did a project several years back file with their insurance for some wind damage.  Ultimately, an expert came out and made a one line comment that my company had to have touched the soffits in order to tear or and re-side the apartments.  Their insurance company promptly wrote them a check and filed a claim against our insurance company reiterating the experts opinion.  Even the the crew, myself AND the apartment’s onsite maintenance manager ALL said the soffits were not touched.  The property manager even told the insurance company’s attorney that no, the soffits were not touched.  Their attorney then went to the counsel assigned by my insurance company and would go no lower than $3,000 to settle the matter.  Presumably to cover his own cost.  Our counsel was aware of all the details and even agreed with us, but in the end forced my hand to settle at $3,000.  The price of innocence.  I didn’t have to pay for our attorney, but I was forced to accept the settlement.  Later I learned that if my insurance deductible had been $0.00, my insurance company would have been more inclined to fight for the $3,000.  I learned this from a police officer of all people.

We had another incident where we were being drawn into a cosmetic claim.  The homeowner insisted that we were at 100% at fault for some odd caulking issues.  In our industry, subcontractors are common and had the owner not shared a friendship story about the painter, it might not have stuck out so much why the painter wasn’t being held as a contributor to the homeowners problem.  Somehow the painter was able to avoid implication altogether.  Even with my insistence that any solution would need the painter’s participation.  Ultimately, we had to sue the painter to force them to defend  their role and include them in the settlement process.  People aren’t as likely to sue people they have a positive emotional connection to.  Tough to beat a friendship.  Make sure all parties come to the table, you’ll increase the likelihood of a settlement and mitigate the size of your claim.  Be empathetic and responsive to your to your customers to avoid galvanizing them against you.

Business Issues & Circumstances

25 Mar

Some business issues you can predict.  Depending on your business, there may also be an infinite supply of issues that occur seemingly out of your control and were unpredictable.

I’ve certainly had my share.  Sometimes, in spite of our collective experience, things came up that never in my wildest dreams could I have imagined occurring.

Some areas I will be covering include:

1) Insurance issues

2) 401k issues

3) Employee issues

4) Customer issues

5) Vendor issues

6) Regulatory issues

Cash Flow Ideas

25 Mar

Some cash flow ideas you might consider basic, while others may stir the creative juices.  I’m game for new ideas and your twists.

There are really two different costs to watch, fixed costs and variable costs.

There is revenue to raise.

Bills to pay.

Money to collect.

These all work together in affecting your cash flow.  Ultimately, cash flow boils down to timing cash in with cash out.  Everything else, will influence how easy or difficult this task becomes.

I once had a business owner tell me to make money in the Winter.  Those words have echoed in my brain many a time.  This can prove extremely difficult in a depression for a seasonal industry.  In other words, the industry is shrinking and you can’t tell just how bad the winter will be.  I personally, have found this to be the MOST difficult task to position for and yet believe that ultimately is the most important task to accomplish.

Different industries often have different ways of making money.  In my industry, showrooms and expertise aren’t cheap; which means there is pressure to keep fixed costs high.

A depression environment has forced us to look for ways to push down fixed costs.  With varying degrees of success, there are many ways to lower fixed costs.

1) Let employees go

2) Furlough hours

3) Some states facilitate one week on, one week off – furlough/unemployment

4) Temporary (Winter) layoff

5) Reduce Salary/Wages

6) Use a commission scale to help the business when sales are slow

7) Change management roles to be more directly operational and/or sales (commission based)

8) Close locations

9) Negotiate to reduce your rent

10) Turn down the furnace thermostat

11) Turn off the lights, 10-keys, computers

12) Go digital with as many of your processes as possible

13) Reduce your inventory

14) Reduce your debt

15) Sell assets

 

Introducing Self to Blogging World

25 Mar

Maybe it is a form of therapy, but going through this recession has deeply affected the general economy and depressed my region and my industry deeply affecting my company and myself.  Of course, this isn’t unique in itself as few have been unaffected.

What I hope to add to the world is a collective experience that I believe will HELP existing business owners and prevent newbeez from starting down the road to ruin.

I look to organize this into a few key categories:

1) Small Business Cash Flow Ideas

2) Business Issues and Circumstance

3) You, The Business Owner

Each of these three areas are very different but interconnected.  Fall down in one area and the rest will soon follow.  They each need to be managed to strengthen the others.  In the end, the whole CAN fill the hole.

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