Debate I have with an Employee, Opinions Please

[PCSComputerGuy]

100% up front no exceptions... burned too many times to do anything else. None of my clients find mind it at all.

 

[TenYardFight]

100% up front no exceptions... burned too many times to do anything else. None of my clients find mind it at all.

To be fair, you might not know if they minded... You might not know if they referred you less, bought less, etc...

 

[Rocco]

Wow, what a great discussion, thanks for the ideas! Here is how I think I will do it.

For new residential customers, 100% payment before ordering.
For new business customers, cost down before ordering, the rest upon delivery.
For established business customers, cost down before ordering, net 30 the rest.
For established residential customers, cost down before ordering, the rest upon delivery.

Although being a new business, I do not know how many people will just give me 100% down before I even order the part. Hopefully at that time, I can just cash in on my personality and gain their trust in an untrusting world.

Any large job like what the OP is talking about though, and costs will be paid before I order anything. I don't have the money sitting around to get tied up like that.

 

[Ccomp5950]

The problem with "Costs as down payment" is your customers now have a pretty good idea what your markup is and can use that as a method to talk down your final price. I've had a couple haggle me over this so now I charge parts(and markup) upfront on all orders.

 

[Rocco]

The problem with "Costs as down payment" is your customers now have a pretty good idea what your markup is and can use that as a method to talk down your final price. I've had a couple haggle me over this so now I charge parts(and markup) upfront on all orders.

LOL, why do you have to tell them it is cost they are paying?

 

[Wheelie]

I absolutely do not mean to be rude but as a 9 year business owner I find it a bit strange this question even exists. It's really a no brainer - based on the particulars of your business and who your customer is. I'd think the real question is: why is your employee pounding on you like this?

.

 

[Xander]

If you're going to do it, do it either as 100% Retail or "X% Final Price up-front" . If you charge anything that looks like "cost", you run the risk of encouraging hagglers. Or, at least, just round up soundly so a $433 PC @cost ($600 retail) becomes $500 up-front.

 

[PCSComputerGuy]

To be fair, you might not know if they minded... You might not know if they referred you less, bought less, etc...

You have a point... but they keep coming back for more

 

[Tony_Scarpelli]

In my view we have no business floor planning equipment. I'd demand 50% when I take the order and the balance on the day I deliver it.

Can you afford to lose $10,000? I know I cannot, or would not like it.

What are your potential gains vs losses? Losses are 100% vs maybe a 40% profit margin? So make $4k or lose $10k? I do not like that risk reward balance.

Tell you employee to go back to work and shut the hell up unless he is going to forgo his salary until the $10k is paid in full and he is willing to share the lose if it never gets paid. His ideas and opinions are credulous and have no place in your decision-IMO.

 

[16k_zx81]

cracks me up how a question about mechanics of pricing and accounts gets turned into a discussion about staff management and personnel

Not having a go at anyone in particular (I stuck my oar in too, as usual!) but its just funny how threads broaden out like this to a topic thats kinda out there in relation to the question thats being asked.

 

[seedubya]

cracks me up how a question about mechanics of pricing and accounts gets turned into a discussion about staff management and personnel

Not having a go at anyone in particular (I stuck my oar in too, as usual!) but its just funny how threads broaden out like this to a topic thats kinda out there in relation to the question thats being asked.

Agreed! But what people see in a post is more a reflection on their priorities that the posters.

 

[carrcomp]

cracks me up how a question about mechanics of pricing and accounts gets turned into a discussion about staff management and personnel

Not having a go at anyone in particular (I stuck my oar in too, as usual!) but its just funny how threads broaden out like this to a topic thats kinda out there in relation to the question thats being asked.

I know.

I mean, obviously the real problem here is gun control!

 

[16k_zx81]

I know.

I mean, obviously the real problem here is gun control!

Lolz.

............

 

[YeOldeStonecat]

Please share how you collect money. Net 30, Payment upon completion? Do you collect all money for hardware up front?
Thanks,
Chris

This varies by client.....but generally for anything over $3,000.00 we collect money for the hardware/software purchase up front, and invoice the labor after the project is complete. For brand new clients I'd even collect the hardware money up front, or just send them the quote for them to purchase and I'll just come and do the labor and collect that.

We have purchase larger amounts of hardware/software for our higher volume longtime clients....we've gone about 10K on that. But not often. And it depends on your cash flow at the time also.

Many years ago wholesaler channels extended up HUGE credit limits and therefore we could afford to turn around and pass that onto our clients. But these days, we don't get much for credit from our wholesalers....so why should we become a bank for our clients?

 

[carrcomp]

Please share how you collect money. Net 30, Payment upon completion? Do you collect all money for hardware up front?
Thanks,
Chris

For labor only invoices with Established Business Customers, net 30

Residential or new businesses, upon receipt.

All hardware and software is paid for before they are ordered, no matter the customer.

 

[twincountycomputers]

I have select customers that I will allow to be "due on receipt", this usually means I'll see my money within 2 weeks, and they are all established businesses that I have worked with for years. Walk-in customers are "pay on pickup", no pay, no pickup, unless it happens to be one of the above mentioned business customers.

Net 30 is a relic of the past in my opinion, in this day and age I expect the purchaser to have the funding when they make a purchase, if they don't have the funding, don't make the purchase.

The "due on receipt" rule is basically for the businesses whose A/P dept may be in another state or there may be paperwork on their end or multiple signatures required.

 

[brandonkick]

A lot of good advice here so far.

I like the idea of covering your "costs" up front and then if your willing to do a net 30 on anything it would be the profit portion of the job. I mean yeah it might suck that you lost the profits, but it's far better then paying for equipment that you might not get back and are responsible to pay for.

Also think of the volume of customers who might use the "net" service. You may quickly find that one or two hundred here or there might turn into thousands of your dollars out on the line.

 

[HFultzjr]

I have been in business for over 10 years and one of my employees is fighting me over how to collect the businesses money. Currently for all businesses we do net 30 and require 0 up front.
I believe this is terrible and want to change it immediately. My employee states it is unprofessional to collect any other way.
We are about to sell 10k in computer hardware and I am reluctant to do net 30. Once again my employee swears this is the way to do it.
I want to settle this once in for all. How do all of you collect money? In this last case scenario I am going to put 10k of my money up for 30 days, I believe this is the worst idea ever and I don't think anyone does this without some money down?
Please share how you collect money. Net 30, Payment upon completion? Do you collect all money for hardware up front?
Thanks,
Chris

YOU own the business........YOU set the policies..........legal of course.
EMPLOYEE is employed by YOU......EMPLOYEE follows your policies.
YOU ultimately choose what YOU think is best for YOUR business, as YOU have the most to gain or lose.

However, my commercial customers "expect" 30 day terms with nothing down, except the proper contract and paper work.

Bottom line.....do what YOU feel is best for YOUR company and you will have nobody to praise or criticize but YOU.

If YOU are asking for EMPLOYEE's input, try and work out the differences.
Nothing worse than asking for advice, not considering advice, then regretting it.

Harold

 

[HFultzjr]

Perhaps our experience will serve as an illustration. In '07 we had a client go under that by all appearances was sound, showed good credit, good references. We had a tad over 500K in hardware and services out to them and they were given net 30 terms. They filed for bankruptcy at day 29. Being far down on the creditor list we got pennies on the dollar and a bunch of now used equipment.

Since that time we require hardware to be paid for in full at time of order and services upon completion of the project/acceptance. Admittedly selling hardware is not our main focus but when and where it makes sense we do it.

There are exceptions to the rule of course but it 99% of the time we adhere to the above.

It has not hurt our business at all - cash flows are up considerably and we have had solid growth in each year since making the change.

All I can say is OUCH!

Man that must have hurt and would put most shops out of business.

 

[Ccomp5950]

If half a million was a "write off" for me, I'm pretty sure I would be able to retire with what I had. The interest rate on 2 million is enough for me to be able to live off of ($60,000) semi-comfortably.