Do I look like a bank?

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AnneL

AnneL

SPFG, Supreme Picture Framing God
Joined
Jul 11, 2001
Posts
15,946
Loc
Wautoma, WI USA
I had a company that has brought an occasional piece in to be framed over the years recently bring me 4 pieces in the last 2 weeks with the promise they have lots more to come. The first 2 are ready and now their accounting department wants to set up a line of credit. Our policy is payment upon delivery. I've never dealt with lines of credit before and wouldn't even know how to set it up in my accounts.
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Does anyone else give a line of credit to a company to make it easier on their accounting department? They are a reputable company but I'm wary of such arrangements.
 
Anne - this is the challenge of dealing with large companies. They want to pay when it's convenient for them.

I try to at least get a deposit from them but in most cases I have to bill them and then wait 15-30 days for payment. In some cases I will bill, knowing they will pay in a timely manner and then hold off ordering materials for 2 weeks so that my cash flow is better. This has worked well for me and I am just "a little shop"...

Some corporations have their own corporate credit cards that they will charge it to - see if this is an option. Or see if they can pay up front on the first project then you will set up an account. That would be more fair to me.

good luck

Roz
 
Anne, Also - some businesses I deal with and I know them - I will work up the order, send them out the door with the receipt but they have a corporate check cut for the full amount in hand when they pick up the order... another approach!!

And, I don't think you look like a bank, unless you are large and made of brick and mortar!! tee hee
 
Get a signed copy of a purchase order or failing that a purchase order number. Invoice the company when the order is placed, not when you're finished. Include a copy of the purchase order or the number. That way you have a sliver of a chance of getting paid before you have to pay your supplier. The advent of the corporate credit card has made these things much easier.
 
Do you have a slot on top of your head? If you do then you look like a bank.

My shop is right next to the financial district in San Francisco. I would say that a minimum of 25% of my clients are corporations that and pay through their accounting departments. Some accounting departments aren't even in the same state. So I must frame on account for many of them. I usualy won't do this untill they have established an order history with me like this company you have described in your post. If you don't have competition for their business I would say to have them pay you on completion and make them expense account it. If you do have competition for their business I would say that you should be as accomodating as possible. They will pay you it just takes a little longer (unless their name is Worldcom or something).

One final note regarding corporate credit cards. I would rather wait a couple of weeks for a check than pay the fee for the credit transaction.
 
No Roz, I'm actually pretty small, only 5'2".

I did send them out the door with an invoice but the girl that brought the orders in didn't give it to the accounting department. I faxed them copies this morning. We have another company we have been doing photography for for years that uses their corporate credit card to pay for it but a line of credit is different. That is asking me to take the risk that the company will pay me in the future.

In the past, the company I am doing the framing for has always just sent a check with the person who picked up the order. Why the desire to change now? Something doesn't seem right.
 
Interesting topic. A few additional thoughts...

1) How many of us have established terms (like NET 30) with our suppliers? Isn't this really the same thing - except we are the ones extending the credit?

2) Sometimes, if you want to do business with bigger companies, you just have to play by their rules. The money you have tied up in an order until you get paid is a cost of doing business that your pricing should compensate you for.

3) ALWAYS get a purchase order (PO). In addition to having the potential of getting paid faster, the PO will give you proof that the order was authorized. Otherwise, how do you know that the person placing the order is authorized to make purchases on behalf of their company?

In my experience, the biggest risk for being dissapointed by a corporate customer comes from a broken paperwork trail (including quote, purchase order & proof of delivery).

4) If you want to get paid faster, consider offering a discount for prompt payment (as several moulding vendors do for their customers).

Marc
 
They are a small, local company. In the past, the manager has always either come in in person or sent his assistant with the order, taken the bill with and then paid on pick up. This time, they didn't take a bill with. The assistant didn't wait long enough for me to get one for her, just dropped it and went with instructions to call her when ready.

Good advise Marc. If they want to do it this way on future orders, I'll talk to them about it. I'm not sure if they will because it will take longer for them to get their framing if we have to do all that paperwork. :rolleyes:
 
Ah, good, you have a relationship with the manager, now use it.

Call the manager, and tell them that the assistant didn't wait for the usual copy of the bill . . . .

"Did they want you to FAX it over so they could cut a check for the finished goods, or did they just want to know the total and pick up the copy when they brought the check?"

This way you gave them a choice....to do the same thing: Pay the bill at the time they pich up the work.....just like everyone else.

If your billing policy is COD, why would YOU have to change to suit them? They ain't that big. :D
 
Marc,
Example of exactly why you should get a PO.

I had a client drop off a piece from a corporation to be framed for the company. In the process of framing the art this individual was fired. When we tried to have them pick up and pay they informed us that this individual doesn't work there any more and so they don't want the art and wouldnt pay for it. I did finaly get payment 6 months later but this problem wouldn't have happened if I had received a company PO for the work.
 
Corporate credit cards work for me, but I did a bit of number tweaking so the client ends up covering the fees. There is no more expensive credit card transaction than a corporate card taken over the phone (my statement says they add 1.14%+$.10 per transaction). I refuse no offer of payment, but have learned to build a bit of padding into the corporate pricing.

I also deal with a corporation that has never dealt with POs. They're pretty big, and in 20some years have never once been late on a net30. It's always bugged me that they won't issue a PO, but on the other hand, they rarely ask how much its going to cost.

New accounts get closer scrutiny and business from a friendly referal is usually pro-forma.
 
If you are serious about getting corporate work you are going to have to give a line of credit, terms, whatever you want to call it. As Marc said, how many of us have a line of credit with our suppliers? If they would not give you a line of credit would you buy from them?

As long as you cover yourself (PO#, signature on order ect) you will be fine. Yes some day you might get screwed bt you run that risk with any customer unless they pay all cash up front and who uses cash anymore??
 
The other line of credit you might think about is one from your bank. Our accounts receivable hits 50k and beyond at peak periods. That amount of money has to managed carefully at both ends -you need a system to bill and track invoices and you need sufficient capital to feed the machine while you are waiting for payment.

It can be a complication but as Marc & Tim pointed out-the bigger the account the more likely they are to expect terms.

Peter Bowe
Saline Picture Frame Co.
 
The company I used to work for paid all invoices that gave a discount, but all others were 45 - 90 days.

Vendors we dealt with, that did molds and dies, required 1/3 down on PO , 1/3 as a progress, 1/3 on completion.

I think that you are in charge, you set your terms the way they set their terms

my 2 cents after a glass of wine

Elaine

p.s. Infused! is now open Website under construction, but it is a HOT & SPICY shop!!

Lots of fun and funky to boot.
 
Our entire economic system runs on trust. And it works, so long as the players agree on the negotiated rules of their business relationship, and abide by them.

The trouble comes when one of the parties decides to change the rules in mid-transaction. For example, when the customer agrees to pay in 30 days, and then delays for 60 or 90 days. Or when the supplier gets worried and decides to hold the job until the payment comes, after agreeing to other terms.

It happens.
 
Originally posted by Marc Bluestone:
The money you have tied up in an order until you get paid is a cost of doing business that your pricing should compensate you for.

Marc
Click to expand...
That is a great point Marc. However, what seems to happen with me is, they expect a discount because it is "volume" work. I always have to explain the catch 22 of I can't offer deep discounts AND wait on the money.

Thanks for joining the conversation. Sometimes I feel like Bob Carter is the only business person here.
 
Something that works for us!~ We used to have an average of 45-90 acct.rec. We then went to a full retail then placed the discount only if paid in 30 days. If they paid in over 35 they had to pay full retail. To this day our acct. rec. are on 35 days max. Heck occassionally they pay full retail and never complain and keep coming back. The bigger the company the less the purchasing person knows what the acct. payable dept. does.
When ever questioned about the difference. It is pointed out that they did not pay within the terms. Have not lost any customers because of it. They go back and yell at the accounting dept. for screwing up their budget!~ Remember to use good customer relation techniques.
 
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