Im curious...

[robtown]

More and more these days my clients are stretching out final payment, it is now to the point of hilarity (if it weren't funny anyway). i have companies with millions of dollars in assets, stretching me out 60-90 days routinely. And deposit money? pshaaaawwww.... that don't happen. I don't have a supplier that gives me terms longer than net 30, most of them are net 10. So for that 90 days I have to pay my suppliers 3 times, my rent 3 times, my monthly round of bills 3 times (don't get me started on my current gas bills), my employee 6 times, and me well just whenever I can if I can that is.

As for my small clients, well those jobs are always low profits, and HIGH maintenence, (It seems the lower budget someone has the more they want to be personally involved in the work) and after all that they usually try thier best to skate with product while not leaving that check.

Don't get me wrong here, I build a good product, and we have never had a dispute with quality or delivery, so these issues aren't occuring due to problems like that. And I stay busy, good work seems to find me, every single person I talk to about this echos the same sentiments. I'm spending far too much time these days collecting and not enough time creating, and it's hard on the psyche cause that's not why I signed up for this gig...

Am I alone here,or is anybody else feeling the same?

[lto]

Rob,

My experience has been that I get very uncomfortable with long payment terms, especially where there isn't a repeat business relationship. You have a right, even a duty, to establish what you will accept. I have made an exception to my rule in the past on a fair sized account, only to learn later that they were also doing this with others. My leniency in this case contributed to their false sense of well being, causing them to continue digging a deeper hole. Needless to say, the situation didn’t turn out well. No need to be ashamed to ask for prompt payment of jobs satisfactorily completed. Does anyone allow you 90 days lead time on an order these days?

There are those very few exceptions, people can experience misfortune. The shorter the payment terms, the less opportunity for a special situation to occur which may inhibit payment. You can better afford to lose 10% of your customers than to have even 5% of your jobs go unpaid.

[gene_marshall]

True, that is the hardest part of being a business owner.
We take 100% up front on jobs 1000 bucks or lower.
We take 60% on jobs requiring finish, 30 before finish and 10% on delivery. No exceptions.
When we call to arrainge delivery, we tell them the balance and ask if a check will be waiting.
No check= no delivery.

I suggest you get tough and protect your interests.
Best of luck.
Gene

[robtown]

No, nobody I purchase from extends 90 days to me, and if I try to take it I get nailed to the wall. I'm not ashamed to ask for my money, my frustration is that I have to. I pay my bills promptly, I stretch where I can and raid personal money where I have to. My situation is not with Joe Blow contractors, but with large companies like Brassfield & Gorrie, Coca-Cola, Emory University, Turner Broadcasting, et al...

These are companies that can do as they please, and if I drop out there are a 1000 guys inline ready to cut my throat because they feel that these jobs are worth being cutthroat over, only to find out that it very well may be 6 months after project completion before you see the first dime of your money. And what's truly vexing is that you talk yourself blue in the face about cashflow and prompt payment, it states certain terms in your contract and they sign it knowing what you expect, and then your money gets caught in the loop by the "folks upstairs" etc...

I will price away work or walk away from accepted pricing in a heartbeat if I feel its not in my best interest. When you deal with the heavy hitters you feel somewhat secure that the money is there. I am not at all concerned about losing my customer base because I choose to be a hardass about payment, my pain is that people sign up for the work knowing what I expect, then do whatever they please when it's been delivered.

Thanks for weighing in here, I'm looking forward to other responses to see if it's just me...

[rookie432]

Sometimes (and I mean sometimes) it helps to offer a discount if paid on time. We offer a 2% discount if the bill is paid in 10 days. Now it seems the bigger the company the worse the abuser. Industry standard seems to be 60 days for large firms or manufacturing facilities. If they are a repeat or constant customer and pay consistantly on a 60 day basis we can usually work with those terms. At least we know when we are going to get our money. However in this business if the abuse is not corrected then it's 50% down 50% on delivery no exceptions. Fortunately I have the luxury to walk away from a job because I have another source of income so take this with a grain of salt but it just seems to me that if I have to wait for my money all the time all my profit would be lost in interest payments and replenishment costs. How do I bid on the next big job if I can't afford to purchase the materials and pay labor because all of my receivables are tied up. Cash and cash flow is king.

Bill

[propellers]

Rob, I have been manufacturing a custom product for 27 years and got taken to the cleaners three times and that was in the first two years of business. I felt embarressed about asking for payment upon delivery.
I decided to set a policy and stick to it. Our policy is a min. of 50% of the job up front, there is not a refund of the deposit once the product has been started and a fee if the order has been canx. The product will never leave our facility unless we have 100% payment.

I have heard the crying for years that it's not the purchasing companies policy to prepay. I then let them know there are other companies that will do the work and inform them politely that to do business with with me these are my terms. Sometimes you may have to be creative for instance the government. They have a policy that they will pay in advance if there is a discount, regarless of amount so I give them a token discount and get payment in advance.
We have a very unique product of manufacturing aircraft propellers and being few in the market place I suppose we can get away with being a bit more snobish than the company that manufactures and installs their product, but even so if I presented the policy to the customer and I installed cabinets and they didn't have the check I would not go back home without the cabinets and charge them for a re-installation.
I don't think you can be an effective business person without having and sticking to a policy that works for you. Of course we all want to be friendly and helpful but you can't accept non payment or extended payment when it comes to the survival to your livelyhood.
When the customer has the product, the money will always be harder to obtain and raises stress levels than sitting on the product until the customer hands you the check.

[richards]

Rob,

Talk to your banker about short term loans to cover your receivables. Get a purchase order from the larger clients before starting the job and then take that purchase order to your banker and get a loan to cover as much of the job as necessary. BE SURE to increase your prices enough to cover the cost of the banking charges.

If your banker won't help you, check out the factorers who buy receivables. Their "service" is expensive, but it gets you a check when you need it. Again, you'll have to increase your prices enough to cover the additional finance charges.

As you raise your prices, offer a discount to those who pay according to your terms. In effect, the cost of borrowing money is part of the cost of running a business. If your customer doesn't cause you to have to borrow money, you can discount those costs on his bill. If your customers are national companies, someone in the banking business will give you the necessary loans.

[stevem]

Slightly OT...

The Canadian government has an agency that offers receivables insurance. I have used this service in the past with customers who may be potential deadbeats. The are also private insurance companies that offer this type of policy, including coverage on a one-time basis. This type of insurance is very valuable for piece of mind and can be vital for business survival.

[robtown]

Mike, it's stuff I've considered but it all adds layers and costs, I guess my main frustration is that it all means I spend more time running the business, and less time being the business.

Steve, it's not a situation with deadbeats per se, really it's more larger companies that are apparently unable to produce specialty items themselves lean on smaller guys (me) to do it within budget and deadline, then simply pay when it feels good. I've never encountered a situation where I honestly thought the money wasn't coming.

I'd still be curious to here from more of you on whether it's just me, or if it's an actual trend. I've discussed this with quite a few of the people I deal with on a daily basis, and they seem to have the same or similar issues.

[terryd]

Rob, Having been the big guy (manager of) let me reassure you that it is not about you. The fact is that it was always simply a matter of scale. If you supply a product although needed is not critical I appreciate your efforts and will use your service again but in these days of major companies leveraging each other through A/P's and A/R's you are not going to get any special considerations. The exception to this general practice was when the Prez or VP ask me why so and so was still waiting for his money then you were paid pronto to go away. I had enough trouble covering my nuggets from below without worrying about head shots.

[ed_lang]

I had the same problem with Lowes and Walmart when I ran a small engine shop. It took forever to get paid but they wanted the equipment back quickly. I had to stop delivering fixed equipment till they got their accounts paid to date a few times.... I had their customers equipment and the customers pushed them to pay me.

Shopbot required full payment in advance before they would even start to build my machine... they didn't have any problem telling me that if I didn't pay the next person would just get the machine and I could wait.

[richards]

I think that the question that you should ask is: "Do I want/need this particular customer?" If the answer is yes, then you have to accept the customer and the customers's terms of doing business. If the answer is no, then you find another customer.

For me, finding a customer takes a lot of time and money. Keeping that customer happy, all things being equal, is my first choice. If the customer has terms that cost me time or money, then my prices have to reflect those additional costs. If the customer refuses to pay for the additional cost that they create, then the cost of keeping the customer is probably higher than the cost of finding another customer.

Somewhere along the path of doing what we want to do, we have to accept standard business practices and problems as part of working for ourself. Paperwork is part of business. Satisfying the customer is part of business. Working long hours is part of business. Getting paid has to be part of business. Trying to change a customer's business practices is not part of business.

[terryd]

Mike, you nailed it good!

[Brady Watson]

Early on I decided that I would only accept 50% or more before beginning a job, and ALL customers pay at time of pick-up or delivery. That's it. That's MY policy. I almost got burned prior to this policy, but now I have peace of mind...AND everyone pays before materials even get ordered.

Personally, I am not willing to sell my soul because another 'large' business wants things on their terms. I don't EVER fear that there is another guy around the corner that will get on their knees and do what the large company wants, and in turn, undercut me. If so, then so be it. I bought my bot to get away from these shenanigans indicative of the corporate game, and refuse to carry it into my business.

Some companies, govt agencies, radio stations, etc have balked at my terms whining about thier policy and the whole bit..let me tell you ~ They figured out a way to get what they needed from ME using whatever internal loopholes they had to, or just changed their policy.

As a business owner, and retiree of the corporate saltmines, I have to ask myself just who I am going to be in my business...a champ, or a chump? If someone has to break policy, it's going to be the other company...not mine. If there are going to be headaches, they can have them. I know what I wrote may come off as sounding niave or unreasonable, but it has been working for me with absolutely no problems. I get paid instantly and everyone is happy, especially me.

Just my 2 cents.

-B

[richards]

Brady,

In every industry (that I've worked in) there has been ONE local shop that was clearly the best shop in town. That ONE shop could set its own terms because it was the best. Being the best in town is a very good position to be in. However, I'm sure that there are at least a few of us Shopbot owners who live in towns where there is a lot of other CNC shops competing for the same job or who are still learning how to make everything work. There are probably just as many Shopbot owners who live in areas where there just isn't enough business to keep even one shop busy full time. So, my point is, that on the way to becoming the owner of the best shop in town where everyone knows you are the best, where you can pick and choose your customers and set the terms that make most sense to you, it's sometimes necessary to accept jobs that will pay the bills. In that situation, it would be my goal to price my products so that a decent profit could be made and to add some kind of built-in surcharge to cover the additional costs of meeting the customer's terms.

I completely agree with all of you who demand cash in advance for any unproven customer whose ability to pay may be of concern; however, I have never had a problem collecting from large corporations - except waiting for them to send the check. If they want my business and if I can charge a fair price, and if they want to pay full price instead of receiving a discount for prompt payment, I'll work on their terms.

[rcnewcomb]

In my pre-Shopbot days I worked in IT at 5 different Fortune 500 companies - either as an employee or as a consultant. For many of these companies the standard for the Accounts Payable module was to trigger payment at 53 days from receipt of invoice for vendors that were Net 30. The director of the AP group indicated that they had found that 53 days was their "sweet spot", i.e. optimizing how long they could hold onto cash vs. vendors not working with them.

With one of the largest companies I chose to go through a broker who would pay me faithfully every 30 days because I knew that if I dealt directly with this company's AP group that there would be a 90 day lag between my first invoice and my receiving first payment from them. At the time I didn't have a 3 month cushion so the broker was the better way to go.

[wemme]

Hello. It is good to hear other peoples ideas on this topic and it is an important issue that can make, stress or break small companies.

No one wants to wait on what is thiers.

I've had one customer who had me waiting on money. due to this I now charge them more to compensate for any possible delays in payment.

Regards
Bart

[Brady Watson]

Mike,
I totally get where you are coming from & I guess that I have been lucky in the sense that I have been successful in 'enrolling' customers into my way of doing things when it comes to money. As with anything else, there are agreements or contracts that must be drawn up when business is conducted. Who says that the larger company dictates the rules? Because they make more money a year? Like you have to feel 'grateful' to them because you are just a lowly CNC owner/operator? To me, that is 'poverty thinking' and your company can just as easily create the rules to live by as the larger company can. The terms are in the contract. YOU draw up contracts ALWAYS & you in turn, always get things YOUR way.

I suppose that part of me sharing the way that I bill, will inspire others that they don't have to play by a larger company's rules if it is not aligned with their company's policies. This is especially true for guys that are starting out and/or running their business on a shoestring. Being paid on time is a big deal. Although it may not be aligned with conventional 'wisdom' (which is almost always wrong anyway), I believe that if you don't come from a place of fear or inferiority in your business dealings, then the 'big' company will almost always play ball on your terms. I think that a lot of smaller companies do things as the larger company dictates out of a sense of compelled performance, because if they don't play by their rules, then they'll lose the account. In my dealings this has never happened because I demanded 50% (or more) and immediate payment upon delivery. Everything that I create is custom...and as such, comes a 'custom' payment schedule. I think that a lot of people just do what other companies ask of them because they just haven't realized that there are other possibilities out there for doing things, or they are simply afraid..or don't want to 'rock the boat'.

In closing, I just want to add that I am no different than anyone else on here...and my business probably doesn't differ too much from anyone else's here either. What I have done differently from when I worked for 'corporate' is ask myself just what I am willing to deal with, what I want & how I want to be paid. I decided that I didn't make the customer wait for their parts...I am not willing to wait for my money. I guess it could be worth my while to charge extra to wait, but I prefer to be paid immediately. Once I put my terms in place for the business, then that's it. That's who the company has to be in it's business dealings, no exceptions. By sticking to my guns, I avoid all of the stress and anxiety associated with people not paying on time...to me, that's worth a LOT more than the token fee I would have to charge them to buffer the waiting period and still remain competitive.

I'm not telling anyone that they are wrong for their perspective, just sharing my take on things in my world...

-B

[gerald_d]

Small business often have a problem with supplying to big business (BIG) because they don't understand how BIG processes their payments. Please excuse the local terminology that follows, but I am sure that something similar applies where you are.....

1. If someone from BIG gives you a verbal order, don't accept it. BIG, at minimum, uses an Order Book with order numbers. Somebody in their Payments department checks that they only pay for stuff that has an order number. BIG does this to prevent fraud - otherwise any old employee could order private stuff and get BIG to pay for it.
2. Don't even accept a verbal order no. unless you know them really well.
3. At minimum, get them to fax you their order and check that order to see if the following is clear:
- Legal name of company placing the order and address (The company/place that you are going to write on the bill).
- Name and signature of the person placing the order
- Description of the work and price
- The agreed payment terms, unless you accept their standard 30 or 60 days.
4. If BIG is really big, be suspicious of a hand-written order. Any way, if you have any doubt that you may have payment hassles after receiving the order, call their Payments department and ask them if Order no. 123 is registered for future payment - the Payments departments bear the brunt of accusations of slow/non-payment and they normally gladly tell you if you have a valid order or not.
5. This could be the point where you learn that you need to be a registered supplier on BIG's system before they will pay you. Meaning that you have to fill in some form with your legal name, address, tax number, etc.
6. Close to delivery time, call BIG's Payments department and ask them what paperwork they need to process a payment. Typically they will need a POD (Proof of delivery) signed by the same bloke as who signed the order. (So, get a signature when you deliver.)
7. If your bill is not paid by month end, send a Statement that lists all your bills presented in that month and attach copies of the bills to the back of that. Often we find that the monthly Statement is the most important trigger to getting payments - BIG's Payments department is geared towards servicing their big suppliers and there they only write cheques for Statements. It is not rude or aggressive to send these reminders, it is the norm, and if you don't send them you get left behind. And do realise that the 30 or 60 days is only measured from the Statement date (don't plead ignorance on this - that's how your credit card works)

I don't share the sentiments in this thread about avoiding doing business with BIG. Get to understand them and their systems and it can be very profitable to you. BIG is not out to screw the little guy - heck, they could make a lot more money screwing another big guy. But BIG does have systems in place to prevent employee fraud and you need to navigate these systems.

[bleeth]

Dealing with larger companies in such a way as to get paid on time takes a bit of imagination. In the commercial part of casework business there is usually some part of the contract that spells out billing and payment dates. The billing date is often construed by small contractors as the soonest they can bill after the job or phase is completed. Larger or more savvy subs, however are aware that you can include in your bill work anticipated to be complete by the time payment is rendered. As such, on a job I am now working on that includes three phases over 1 1/2 mos, I just billed for all materials for the job and two phases of installation even though we are just now starting to install phase one. This is not unusual and the only thing you have to do is make sure you actually get the work in when you are supposed to.

Dave

[richards]

Gerald,
Your advice, if heeded, would eliminate most of the problems that a small business owner has when working with big business.

[gerald_d]

Mike, it took me a long time to realise that is the system. It is a very simple set of logical principles - so simple that business schools don't bother to teach them.

[beacon14]

I can't contribute from the BIG point of view, but another common technique I have encountered is the "standard" practice of asking for a discount. My former partner had a repeating order from a customer who was bought by a larger company. When it came time to reorder, his contact had to pass the call to the purchasing department, who asked in all sincerity if he could do the same job for 10% less. When he replied no, but he'd be happy to do the same work for 10% more, the purchasing agent said something to the effect of "that's fine, I just had to ask". Part of their job is to beat down the suppliers to increase their own bottom line. You don't have to fall for it.

[olecrafty]

I solved most of my slow pay problems. I hate to do business this way, but I found I like to eat after I pay all my bills. Previous to these policies 60 to 90 day payment was the norm, and if the big companies found you would put up with it you wouldn't see any money for 120 days.

In my business I encounter large companies and individuals. So I have two policies to cover the varied needs.

One time customers, (whether individual or corporate) pay 50% up front and 50% on completion. All purchases under $1000.00 fall under this policy.

Production Items from companies require a written Purchase Order. When I bid a job the terms and conditions are contained in the bid sheet. These conditions are also included on the invoices.

Trade Credit Terms and Conditions
Payment on all invoices is due whithin (30) days of the invoice date.
Payment delays may prevent timely shipment of orders.
All overdue invoices bear interest at 18% (1.5% percent) per month on the unpayed balance. (I inforce this dilligently.)
Debtor agrees to pay all costs of collection, including any court costs and attorneys fees.
All transactions are governed by the laws of the state of Texas.

I inquire about the invoices 15 days after submittal. All invoices are emailed and sent by mail. If I don't recieve payment by the deadline an email is sent to the purchasing agent, his supervisor, the accounts payable and his supervisor. If payment is not sent fedex next day the CFO gets an email and a letter sent plus a phone call at least 3 times a day until payment is recieved.

I have never lost a costomer with this policy. An added unexpected bonus is I have gained respect from those I have had to collect from.
Also the payments start coming in on time. I have actually picked up extra work while discussing the payment problems with a customer.
(Always be polite when discussing payment. Remember the person you are talking to may not have control over the situation.)
olecrafty@charter.net (mailto:olecrafty@charter.net)

[gerald_d]

Over here, the invoice date only counts as far as to identify the month which it is in....A February invoice is typically considered "30 days promptly paid" if it is paid by the last day of March and often a discount is given for this "prompt" payment. Moral of the story, get deliveries in before the month ends - don't delay the invoice, you might miss the month cycle.

My father realised one night, while lying awake thinking of a customer who hadn't paid his bill, that he shouldn't be the only one lying awake. So he called his customers at whatever hour and suggested they need also to lie awake thinking about their side of the issue.

[richards]

I think that sometimes we try to be more important than we should be. The world is a big place with lots of people who are all trying to take care of themselves and their families. I might have a Polyanna view of the world, but I usually give everyone credit for being honest and upright unless he/she proves differently. Even then, I usually give him/her a second chance before taking an unfriendly stand. Standard methods have evolved that are well accepted by the business community. Expecting everyone to conform to our ideas on how to run a business might not be the best way to get the job done, especially when our ideas run contrary to established business methods.

Gerald's post further up on this thread outlined a very viable, and uniform, way of accepting orders and getting paid for those orders. It might be a good idea to remind ourselves that we are business people who use a Shopbot to create a product. The business part of us needs to develop the skills to run a business just like the craftman side of us needs to learn to create products using a Shopbot.

Getting paid for our work is essential, but expecting the World to change directions to meet our own expectations might be a bit much.

[Brady Watson]

I think with anything else, there are no 'right' or 'wrong' ways of doing things, as long as you remain effective in your business dealings. If customers keep coming back, then life is good. If this is not your experience, then you alter your paradigm & methodology to ones that do work. Eventually you settle into a system that you are comfortable with. There isn't one recipe for billing...and there is no 'right' or 'wrong' way as long as you get paid in a timeframe that you deem reasonable.

Just about every one of us experienced the 'Cash & Carry' rules of doing business when we bought our ShopBot(s)...100% paid in FULL before you get your tool. I use the exact same method (or 50% dn & COD). It works for those who choose to implement such policies. As Ed points out, they have absolutely no qualms about telling you that they will just sell 'your' tool to someone who does have the money now...I don't think that ShopBot asks the 'world' to change; only to accept payment terms. I think that ShopBot must have made themselves important enough to accept nothing less than that way of doing business; that seems pretty reasonable to me.

-B

[gerald_d]

The ShopBot business model is fine when a very small percentage of your customers bring repeat business. Practically every customer is a new one and it makes no sense to do a credit analysis of every single one when you have guys lined up willing to pay cash for your product as fast as you can produce.

[Brady Watson]

Point taken. If you scroll up you will note that Gene & Lonnie use the same basic model as ShopBot...and both of them do more business than you can shake a stick at. I guess that's really the whole idea with business...to have people lined up to buy your product as fast as you can produce it, right? If that isn't the ultimate objective of any business model, then what is?

-B

[gerald_d]

Brady, if I may be so bold (cheeky) to ask, having made it really clear that you take a 50% deposit on order and final payment on delivery, do you really hold ShopBot to that when they order videos from you?

[Brady Watson]

That's an ancient Chinese secret

[richards]

With two sons who have MBAs, I keep getting asked the question: "When are you going to stop thinking like a shop owner and start thinking and acting like the owner of a real business?" When those words come from sons, they sting a little, but they're right. As long as I plan and act like a little shop owner, I'm going to stay a little shop owner. When I start running the business like a real business owner, I'll start growing. Sometimes I have to ask myself whether I want to be a technician who enjoys running a CNC router or whether I want to run a business and let others run the router when necessary.

Sometimes I have to remind myself that when I bought the Shopbot, I had to throw out most of my previous knowledge about running a router. A little hand held router can't do the things that a Shopbot can. There are better, more efficient ways to cut material. Thinking that I should only make 1/8-inch deep cuts at 1 or 2 inches per second in particle board is not very productive. Learning that I can make that cut full depth at 10 inches per second is more productive. Insisting that shallow cuts at slow speed are the only way to run a router hurts no one but myself. In the same manner, clinging to my concepts of how to run a business can hurt just as much as routing the old fashioned way.

[kerrazy]

Rob,
I as many have mentioned here can appreciate what you are relaying. I recently refused to submit a tender for a governemtn contract, as they would not meet my policy of 50% down and balance on delivery. This was very difficult for me, and I even added salt to this wound by finding out the next day that my tender would have one as only one other sign shop supplied a tender and I was literally a few dollars cheaper than them. My concern was, mostly timim=ng of the contract. The tender needed to be submitted by the 21st of December, and the work supplied by the 27th of january. With a 2 week shutdown for suppliers it would reduce my real work hours considerably, and then they wuold not pay until 30 days after the 27th of January, which realistacly wuold be march, and that was only if all billing was accurate. This would force me to jump through their hoops to provide them with a spectacular product. It would also mean that I woul have to by material on Dec 22nd supply the job for the 27th of jan 35days later and then wait an additional 30 days in a perfect world for payment, so stretching my cash over 65 days if all was in order in the world. As I do not take terms with my vendors, I can ussaully leverage some pricing. And I also do my best to pass that along to clients. But with faceless corporations or governmants that gets lost, to the point with this contract they had suggested I increase my prices to offset the nuisance factor for waiting on the money. That pissed me off as it was a governemtn contract and who's goddamn money were they really spending at the end of the day...Mine.

I also had a what I would call a really "good" client who requirred work for the caribean that I had I great relationship with. They were aware of my policy, which even as they were aware of I repeat with each purchse.
on this job they had a time crunch for the opening of a new business in Barbados and needed a good size storefront sign. The initial opening date was set, and they had a container that would be leaving about 8 weeks before the opening date, wich would give me about 3 weeks to accomplish artwork, renderings, approvals and production. Tight but I could do it. Ok get me a deposit and let's go.... Simple enough. This opend a new can of worms, as they would have to get a bank draft on their Barbados bank accont and have it mailed to me...hmmm no deposit no starting... mail from Barbados, waiting for a draft to clear. not gonna happen.
So as they were good clients I started the sign as I knew I would be geting caught somewhere. I carved the sign components and primed them, as it was all in stock material so no real cash outlay so far. Still no deposit had been sorted out at this time to the point my main contact was mad at me for not accepting credit cards to help him with this problem. I in foresight had applied for credit card acceptance and it would be about a 10 day delay, but frankly I only would do this as a last resort, as it does cost money out of my pocket to process credit cards.
The client and I got into a real heated debate as he felt I was not being accomadating when in fact I had been more than accomadating by starting their piece with out a deposit despite our company policy (my distant Bastard, so I still look like the good guy).
In the end their construction guys were behind schedule, so it gave them some wiggle room, that allowed me to get my credit card processing in place and I was able to process 90% of their transaction before I shipped there sign and the remaining balance on the day I shipped.

So even in a perfect world with "good" clients it can be very frustrating but the best part out of that was me getting set up to accept credit cards and my Credit card sales for november alone were about $6000.00 as clients were more than willing to offer that for a deposit, it really is much easier now, and at the end of the day I do not have as much stress, yes it costs me roughly 2% but I burn up more than that in wasted man hours chasing money.
Most big companies have expense cards, that have ridiculous limits on them so They would realistacally be able to purchse big items, and they like the fact that they can earn air miles as well.

Dale

[patricktoomey]

I think it's been pretty well stated by other posters above but to add my 2 cents...

It seems to depend on the area in which you work. In central Florida there is a lot of work floating around and I've never had a problem with large deposits. You have to do what you have to do when the bills need paid but I have turned down the few jobs where the client didn't agree to my terms. I go 50% down, 30% before first cut and 20% on delivery. This way I am covered no matter what happens at any stage in the job. Anyone not willing to pay this will probably end up being trouble in the end so it may be best to avoid them as a client. Again, I realize that different areas are not going to support this practice but there is one other factor that I would like to mention. I think that confidence and attitude during your presentation and your proposal matter. In other words, if you go in with a shy and appologetic attitude, in effect begging for your deposit, you are less likely to get it. I am not cocky by any stretch of the imagination but I am confident enough in my work that I clearly and unappologetically state my terms in a way that the prospect knows it's not negotiable. They can either accept my terms and get the quality they want or they're welcome to go somewhere else with better terms and HOPE they get the quality they want. Once I had enough in my portfolio to show and prove my quality I have had no problems with this approach.

[robtown]

Many thanks to one and all for your help here. I take it you all sense my frustration, some of you don't quite grasp what I'm saying, probably because I've vented a bit in my comments and seem to have given the impression that I'm not covering my bases. I do have a contract that states all the standards in regards to payment, penalties, etc... I do require said contract to be signed and accompanied by 50% down or a PO from purchasing. What gets me is when a large company, for hypothetical assumptions lets call them Cako Calo, signs and sends a PO then fails to abide by agreed upon terms, stretching out payments to 6 months. There's not a lot I can do about that other than just walk away from the work, which is where I am currently at. They don't give two squirts about paying that 1.5% penalty, but even that becomes a battle (more wasted time and energy) in the end.

Sigh... I guess I just wasn't meant to be a businessman, I tend to take it too personal when I fear for my family's well-being which has occured too many times when my accounts recievables top 20,000 or more at a time and I scramble to keep the cashflow intact.

My comments to the fact that there are always others to step in do the work are a bit misleading, I don't fear competition, I relish it. When my products are compared side by side to the "competitor's" 9 times out of 10 I get the repeat work due to the quality and level of detail we strive for here. This in spite of the fact that my pricing structure is usually higher than most others. That comment was thrown in there to illustrate that if I walk away, there is an endless stream of Rubes willing to take the payment abuse that I am no longer willing to tolerate. Unfortunately this weakens my position and gives me little or no leverage as quality matters very little to BIG anymore, what seems to matter is that LITTLE will gladly get stepped on to do Cako Calo's work because it's brings some level of Prestige, and because they don't realize what exactly they are getting into in terms of actually getting paid. In a lot of ways it's all a big shell game, or maybe it's more like "whack-a-mole"...

[marshawk]

Unfortunately the big companies expect you to conform to their practices. They really could not give a darn because there are others out there who will step in and do the job, as you said.

As to being a good businessman or not, the decision to do the work on their terms is the one we, as small business, need to make.

Unfortunately, it seems to be a matter of "suck it up" or "move on".

We have put off offering our products to large companies until our grass roots cash flow improves enough to handle the payment time lapse. And even then, there is a lot to be said for staying small and keeping out of that muck.

Chip

[robtown]

Unfortunately, you are correct, that's the choice we face. It would be better if we could all band together and put our collective foot down to these shenanigans, but that ain't gonna happen, it would take a LOT more than the folks who frequent this forum to make any sort of impact.

The thing about it is that it's not just a payment policy, it's a game, it's a way for BIG to bleed the small guy out until he's just willing to lay down and take it, or he goes away and another small guy steps into the breach, either way its no good for any of us. What we are really doing is financing BIG our work for peanuts, enabling BIG to "produce" our product without having to invest anything into the process other than some measly 1.5% monthly charges, thus saving massive costs on insurance, employees, and typical overhead items that we all subsidize BIG on. If I could skip my liability insurance, workmans comp, and SS payments, and instead simply pay a 1.5% penalty on my payables... why I'd be like a pig in ...

Well, you know what I'm saying ;)

Again, this has been a good discussion, I know I whined excessively, and you all listened well, beyond that your words and ideas have helped a lot.