Bad Customers Always Find a Home

This may be stating the obvious…but, as I have worked with many owners over the years, I have found that the attitude and the policies (or lack thereof) of the owner will often result in a portfolio of either good or bad customers. Slow pay customers will often find a home at a shop that will tolerate their inability or unwillingness to pay in a timely manner.

I believe in a firm policy that any accounts that go beyond 90 days should immediately be placed on COD. If your policy is 30 days net or 2 percent/10 net 30, then enforce it, and expect your staff to as well.

I often hear the argument that if I stick to a firm policy and cut off the credit, I will lose the account. This is the typical feeling of sales people that are not trained properly. I usually find that fear to simply be an excuse to avoid unpleasant collection calls or a lack of courage to enforce a policy.

Of course, there can be exceptions if one consciously approves longer terms for an otherwise good client and for good reason. If the client adheres to the terms agreed upon, that may be a good business decision—especially if you build in extra margin in the pricing. Commonsense must accompany any policy enforcement. If you get clients started out right, you can often avoid bad accounts receivable problems.

Follow these basics when landing a new client:

  • Require the completion of a credit application and perform appropriate credit checks.
  • Explain your terms of sale and that you enforce them just like the client should with its customers.
  • Require a credit card or 50-percent deposit for any jobs done prior to approval of credit application.
  • Clarify whether your terms are based on individual invoice or on a monthly statement.
  • Determine if the invoice is to be left with the job or mailed to the appropriate manager/department.
  • Follow up on the first order and ensure terms of sale were followed and payment received in a timely manner.
  • Have clear responsibility designated for managing collecting A/R.
  • Schedule a personal call from management to thank the client for its business and timely payment.

Sorry if this sounds like Business/Credit 101. But, these basics are violated every day by shops all across North America. Those that do not follow these fundamentals will find that the bad customers will drift their way over time.

Carl Gerhardt is the chairman of Alliance Franchise Brands LLC, the parent company of Allegra Network LLC and Sign & Graphics Operations LCC, and a world leader in marketing, visual and graphics communications, linking more than 600 locations in the United States, Canada and United Kingdom. The company’s Marketing & Print Division, headquartered in Plymouth, MI, is comprised of Allegra, American Speedy Printing, Insty-Prints, Speedy Printing and Zippy Print brands of marketing, printing, mailing and Web services providers. Its Sign & Graphics Division, headquartered in Columbia, MD, is comprised of Image360, Signs By Tomorrow and Signs Now brands of sign and graphics communications providers.

Carl and his wife, Judy, owned and operated their own successful Allegra franchise for nearly 20 years before selling the $2.3 million operation in 2003. He is a PrintImage International/NAQP Honorary Lifetime Member and was inducted into NAPL’s prestigious Soderstrom Society in 2010 in recognition of his contribution to the industry.

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Comments
  • Katie Watts

    Good timing for me to read this. I just got fired by a "bad" client who went somewhere out of state for price alone, and we treated him as a VIP. He always turned in jobs late and expected miracle turnarounds which we always achieved; we served him coffee while he camped in our conference room for 2 hours making edits to his magazine last minute so we could print the next day. We caught typos and gave him 20 free issues each month. He often asked us to hold his checks for a day or two. We feel that this type of service is worth more than just being the lowest price. Now I need to find a client who appreciates that to replace him.