Questions on cash flow and buisness?

SEveral larger places around here do this, You want (firewood, gravle, heating oil, hay etc) You have to pay up front before delivery. Some of us were talking and wondering if it would work for the small guy as cash is in short supply? Gas stations went to this too = no drive offs. One guy said his buisness may have dropped a bit but his unpaid accounts dropped to zero. Lets hear from your area.

I hate paying up front for something, it kinda gives a feeling of mistrust, it also puts a damper on recourse if your unhappy with the service or product. I always hated paying for television programs 30 days in advance.

It's one way of staying in business. Friend of mine has a auto repair shop, he has people trying to stiff him on payment all the time. Some want "payment plans". That pretty much never works out well.

I used to have a steel fabricating business, and if I could have gotten paid up front (which is unrealistic in that line of business) or at least paid upon delivery I would still be in business

all gas stations in this area of Kentucky are pay first or pay at pump

Way i look at it you don't go to wale-mart etc get item and pay them next week?

i never pay up front,but i do pay all my bills, to me a business trying to get customers to pay first tells me the business doesnt have enough money to operate, its being run out of its owners back pocket, we have had a decade of fly by night contractors in the county doing that some didnt even hold business licences, they took all the money up front so they 'could purchase building materials' [ 30 % up front is not unusual for this] the problem is several contractors took the money and ran and did it to several people, thats a nice wad of money and its very hard to procecute these people as they tend to stay mobile , for gravel, [ im in the gravel hauling business] paying up front is a good way to go broke, the gravel is sold by the ton at the crusher how much gravel gets in a load at our place depends on how full the loader operator fulls his bucket ,the loaders are so big that it can vary by several tons if you sold a "load" containing a average 14 tons, but the loader operator dropped 16 on the truck you would owe for the extra gravel, since you had your customer pre pay you have no way to charge him for the extra gravel, and backing up to the pile again and blocking 8 to 10 other rigs trying to get loaded while you try to drop 2 tons off yours is a good way to get beat time is money and these guys have to make their living too

It depends on the business. My tool & die design service I'll give net 30 days terms to pay invoices after completion of the project. My wife's farm produce stand is cash and carry. When we sell butcher hogs we get a deposit and then the remainder on the hanging weight prior to pick up from the butcher shop.

You do if you pay with a credit card.

Cash is king.

Companies that are in financial stress probably have had their lines of credit cancelled and can no longer afford to finance their customer's purchases for 30-90 days.

Alot of the farmers I did work for wanted you to come in and eat diner with them. Dont turn them down, you can feed your sandwich to the dog later. Also, when I was finishing up they would come around with their checkbook and want to pay me. And I hadnt figured what they owed me yet.I was wiring grain bins and shop buildings. Yes,I was licensed and insured.

steveormary

The differance is that with prepay, you have nothing yet. At Walmart you have something in your hand. That is cash on delivery, not prepay.
When material is delivered or work is complete, then I pay.
I have seen too many of the prepay guys never complete the work.

In my stainless business, I require a "financial commitment" before I will ship. On some custom pieces, that commitment before I start the job. I ship all over the country and 99.9% of the folks are honorable, but that .1% screw things up for everyone. My policy is checks are cashed a few days before the piece is ready and credit cards are not charged until the day I ship the item. I've been stiffed a couple times.

Funny, I had a guy call me early this spring, He wanted me to make up a muffler and ship it to him and if he liked it he would pay me for it.
Had to step back and think about that one a minute. I explained to him that I haven't run into many business's (at least that are still in business), that do business that way.
I guarantee my work againts most everything but stupidity on the buyer's part, so I really didn't need his business that bad.

I run a small investment casting foundry in West Michigan while the owner is off on his boat or enjoying his house in Florida.

We have seen some customers fall behind in payments and we take that very seriously. Our terms are net 30 days but good accounts will go to net 60. The worst offenders are sub-tier companies that are doing machining on castings that we make for Eaton Aerospace Corp. Eaton is too big for people to walk away from and they string the suppliers out forever. The joke here is that their terms are "net never".

It represents about 10% of our business and as bad as the tier 2 guys are, Eaton directly is worse. We are now in the process of throwing them out. They are getting so nit-picky that they are rejecting everything and charging us back $250.00 every time they write something up, regardless of who's fault it is.

Other than that, no noticible increase in pre-pay at the gas stations. One thing that I will do if people ask for payment up front is ask for a cash discount. Doesn't always work but sometimes you can get a few points for cash. Bought a new furnace last January and got $200.00 off for cash. Would not have gotten it without asking.

Depends on the product or business.

I will not pay for firewood up fron because there are more crooks selling than buying.

I have yet to get a full cord/half cord or what ever.

I cant imagine running a business in this country, every 30 years we have a economic cycle that bankrupts the country. Money is printed willy nilly, so it is almost impossible to have real gain, other than numbers on paper.

Good luck to all who run a business, i am not willing to risk my house, cars, wife, kids, dog, and marriage for a business. That probably makes me a coward, but recovering from a business failure seems impossible to me.

I am saying this because it seems whenever the economy is good, there is no reinvestment into infrastructure, and when the econony collapses, we print more money, which devalues the dollar, and the business

It depends on the customer. I prefer new customers inspect the load before it gets loaded. Returning customers, I give 30 days. My terms are net 30 days, returns no questions asked for replacement but return freight is on the customer, no cash refunds.

I've had very few problems with no pays. I tend to be pretty aggressive on collections. Polite, friendly and all that but I send statements when the hay is delivered, monthly bills, etc. For pick up at the farm, I only sell if they pay before it leaves or are buying on contract.

We changed our terms to net 15, it helped. We try to be flexible, but cash flow is necessary to running a business. There will always be people that pay late though. Just have to figure out if it's worth it or not. Or, if you know who they are, figure some extra in for their job for playing bank. But, no reason for going belly up and selling to no payers just to have work. We've done this for 35 years and we always have to keep on eye on it, unfortunately.

Nooo, paying with a credit cards is (at a store or on order) paying on delivery. Actually for gravel paying the driver with a credit card (not usual) is paying after the fact cause he still has to turn in the bill.
I like paying with a card basicly because with bad product the merchant is usually more willing to make it right. Why, because is you inform the card issueer and do not pay that portion of the bill the bank will deal with the merchant.
The other reason I like cards is the convience of one bill at the end of the month.

Eaton is run like crap. I worked for large Auto supplier in Michigan and that company was bought by Eaton in the mid 90's. In 2002 the company was closed up. What was left was put into other plants. Can you imagine paying $80 million for a company and then telling shareholders that you wrecked it and it is worth 1/4 of what was paid for it.
Total idiots.

eric you are correct some things get 1/3 or so up front. Around here you have litte recorse once the item is delivered.

Cash is King ! I used to have lots of accounts on the books, no more. Down to two ,,and they are very good about paying . Any one else is cash , no C Cards . any large job where I have lots tied up in parts or motor jobs require %50 down before I start on them . Gets me out of the banking business and I have lot less headaches . The people that complain about , I usually wouldn't wan them as customers in the first place .

Most all businesses like their customers are operating on borrowed money. New customers pay cash, traveling workers or customers pay cash, beats chasing someone down to collect on a bouncing rubber check! Cash is king in this crap economy I'd rather give someone a discount that pays cash too but no discount for those that pay other ways. Start your own business and give everyone you can cheap free credit and see how long you last. Look at what happened to lots of banks and mortgage companies.

Cash is king, nothing leaves until paid for. I worked for an independent shop that from time to time would put a mechanic"s lein on a car title and later on sell the vehicle to pay the bill. I always knew when that was going on because we had to make sure we blocked it in , or put it inside at night.

I have a friend who had a sign in his shop that read:

My banker and I have an agreement. He doesn't fix cars and I don't loan money.

We (2 man outfit) just the last half of out last bill today from one of our best customers (currently a 5 man outfit, down from 8-10 a few months back)right after he finally got paid for the work he did for a big outfit subbing for a BIG outfit. The BIG outfit was paying the big outfit three times month who, in turn was psying the 5 man outfit whenever they felt like it (ie after he raised enough he!!) before it finally trickled down to us at the bottom of the hill.

Is it bad, yes, but it could be worse. The money is there, the problem is the ones that have it want to keep it instead of turning it loose for those of us lower down the chain.

I do grading/dirtwork/landscaping with Skids--have a decent-sized business with several crews. I have very few problems and have been totally stiffed only a couple of times.
1) On Invoice, "add" $100, $1000, etc.--depending on size of job, and state, "Please deduct $100 (or whatever)if paid in 5 days" Really helps
2) I quit working as a subcontractor. The general contractors usually pay slow and try to beat you down on price, so I don't even bid a job if the request comes from another contractor. (I keep plenty busy without "helping" my competition).
3)If I need to work out a payment plan to land a job, I will. Most people honest enough to say they need a payment plan will actually honor it.
4)If there is communiction once a bill gets 30 days old, I am understanding, but if you lie to me or won't answer my calls, I sue if bill is 60 days old. I have ALWAYS collected in court, and have always actually been paid once I win. I don't care about what the deadbeats say that I have sued--they have enough of a reputation of not paying that no one listens to them anyway.
5) Any materials are paid up-front before I begin work. I don't know if a new, unestablished business could dictate this or not. I didn't do this until I was well-established and had a reputation for good work.
6) Put a nice profit in EVERY bid. Makes it worth waiting for. DO NOT WORK CHEAP but give the customer VALUE--meaning do good work. In my business, if I land more than half of my bids---#1, I am working too cheap #2, I get too far behind. Do not be afraid to make money (don't work cheap). People will pay your price if you do premium work. Always provide VALUE.
7) Don't be afraid to sue. After 60 days with no communication, just get it done. On the other hand, if the customer keeps me informed of why he can't pay and/or begins payments, I am understanding. Life throws everyone curves once in a while.
8) If you have a bad feeling about a potential customer, just decline the work.

PS-- A list like this would have helped me a lot years ago. These are hard lessons to learn.

they have a lot of relatives.