PPB March 2017

MARCH 2017

INNOVATE

It is a little more difficult to change the

culture of the large client companies who

are already in the habit of paying you in

120 days, but try offering a percentage

discount if they pay early—say, within the

first 30 days. For new clients—since the

products we provide are so specialized

and customized—it is perfectly acceptable

to have them pay in advance—especially

first-time clients—or use a percentage split

like 60 percent up front, 40 percent due on

delivery. The important thing is to establish

the rules up front. Make your terms clear by

adding them to your order confirmations

and invoices, and add a statement that a

finance charge will be added for paying

late. Oh, and for the invoice ‘pickers’—

don’t change the date on the invoice when

you make edits—that way the due date will

remain the same regardless.

AMANDA COREY, MAS

President

Biz Mark, Inc.

PPAI 261459

By offering a two- or three-percent rebate

if the invoice is paid within 15 days of

invoice date, you will be able to instantly

put an end to your cash flow issue and

avoid turning away contracts.

It is likely you will feel giving back this

amount of your margin is a way toomuch.

However, as I have demonstrated below, it is

far less than carrying receivables 120 days.

A $50,000 order would mean a rebate

of $1,500 if you were forced to offer a

three-percent rebate for a large company

to accept. As part of that acceptance you

would put in their agreement that the

invoice must be paid in full in order for

your system to allow the rebate and thus

eliminate small error short pays, etc.

$50,000 has a value to you of $136.99 per

day for a one-year period ($50,000/365).

So getting paid on $50,000 in 15 days with

no deductions provides you an increased

cash flow of 105 days. ($136.99 x 105 days

= $14,383.95). $14,383.95 vs $1,500 is

a savings of $12,883.95 to your bottom

line and can now be used to pay out

commissions, etc.

CHRIS B. BIRDWELL

Credit Strategies Manager

Pioneer Balloon

PPAI 113823

You

are the one that sets the terms for

your clients and you teach them how to

buy from you. If you don’t want to offer

terms, then don’t. As a distributor, I

worked with very large clients and they

had no problem paying up front. In this

age of online buying, people are used to

paying for goods and waiting for them

to arrive after the fact per the terms you

set forth in advance. Quote shipping up

front and put “No overs” on your purchase

orders. Send a proof with a disclaimer

that says “Production begins once proof is

approved and payment is received.” You

don’t have to charge the card until the

order ships, just to avoid having to change

the charge or issue a refund in the event

of a problem, but at least then you are

covered without having to chase clients for

payment after the fact.

CHARITY GIBSON

President

Green Banana Social (formerly Green

Banana Promos)

PPAI 470349

At our company, we do not allow

customers to go to 120 days to pay. There

are always going to be issues with a specific

invoice, but not the whole account. We

hold orders placed and withdraw terms

in order for us to not lose in the long run.

I think that a lot of this has to do with

business relationships you have with

customers. We strive to get to know our

customers and build foundations on top

of that. With that comes trust and knowing

that our customer, if there is an issue, will

Do YouHave

An Answer?

A Distributor Asks:

Someone

referred me a possible client and asked

if I pay a referral fee. Nobody has ever

asked me for a referral fee before, and

when I refer business to people, I never

asked anyone to pay me. Do other

distributors pay referral fees? If so, how

do you calculate what that should be?

What’s Your Answer?

answers along with your name, title

and company name by

March 24

Question@ppai.org

for possible

inclusion in an upcoming issue of

PPB

magazine.

Julie Richie is associate

editor for

PPB.

reach out to us so we are able to help.

I think other companies should build

relationships with their customers, make

sure that the terms are clearly outlined,

and stick to the terms. Withdraw terms if

needed and hold orders. Customers are

more likely to pay if you are holding an

order for their customer and they need

the order, than if you’re just releasing all

orders and not getting any payments.

ASHLEY SUMNER

A/R Team Lead

Hub Pen Company

PPAI 110772