Re: Deposits

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gemsmom

gemsmom

SGF, Supreme Grumble Framer
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I know we have discussed deposits before, and some take them, some don't. I have always taken them, but usually 1/3. After the holidays I was going through what was left under the counter. Too much was left, even with a deposit. I decided we were going to start getting 1/2 instead. Our computer figures out the sum, we tell the customer they can leave $xxx's, whatever 1/2 is, or pay in full. I want to report most people choose to pay in full. I was really surprised at this. So, if you are having a cash-flow problem, people leaving their things too long, or just want the money sooner, try it. I know some have trouble asking for money, but when you are in business, it is a necessity.
Something someone told me years ago when I was new to the business-If someone offers you money, take it. This was when I was asking for a deposit and they offered to pay in full. I told them they only had to leave 1/3. That is when they told me to never refuse money. Ever since then, I've followed their advice. So if someone wants to pay in full, don't say that's okay, I only need 1/3, 1/2 or nothing, just take the money.
 
Pamela: we're the opposite. We almost INSIST on full payment up front, unless it's (1) a corporate account or (2) they've been with us since almost day one. You know the type, they spend $500 without a blink, love everything you do. etc etc.

But for the average customer, it's full boat up front. If I get a hesitation, I laughingly say "ya kow, in a small business, cash flow is everyting" And keep it light.

Only if I get real resistance do I then offer the 50% deposit thing. I had a ton of these during Christmas and my receivables were hovering around $5000 which is way too uncomfortable for me.

I'd be interested inhearing from other folk who almost demand total payment up front--or at least use some phrase to "demand" upfront payment.
 
A couple of years ago, I re-entered the picture framing business, after an abscence of many years. I noticed a couple of significant changes from "way back when". At that time, most people paid by check of cash. A few paid with credit cards.

Now, most pay by credit card, most pay up front, or a significant deposit. I usually suggest 1/2, if they would prefer to leave a deposit. But like others have mentioned, they usually pay in full.

I like that trend and encourage it. I guess with the increased use of credit cards, there's a lot more willingness to pay at the placing of the order. :cool:
 
Best advise I learned: GET ~50% DOWN.

It gives you the cash flow, you need to manage and keep your suppliers and you happy.

From Thanksgiving to Christmas, if wanted by Christmas pay in full in advance.

And rush job, paid in advance.

NOTE! One 48 hour rush job need on the 23rd of December 2002 was just picked up yesterday. (old customer no deposit taken)

[ 02-01-2003, 07:47 PM: Message edited by: framer ]
 
I hate it when they pay in full. Where is the incentive to finish the work? ;) I hate it when they only give me 50%. I want more money than that. ;) I really hate it when they want to leave no money :mad: I really would like them to pay in full when they place the order, and then pay in full when they pick it up, but no takers so far....
 
Ellen, how true.

I can't tell you how many times we got a huge order and the customer paid in full and within thirty seconds of the door closing we say "well that went well, now all we have to do is all the @&%#$*%#@ work.

Sometimes when my better customers ask to know when the work will be done I tell them..."Well, that depends, if you want it quickly don't leave any money. If you don't care when it is done then pay me now in full."

Seriously...we require 50% deposit on custom orders, but forego the policy with our most loyal customers.
 
Vincent, I love it!! When Customers ask to know when the work will be done, I tell them... "well that depends, if you want it quickly don't leave any money. If you dont't care when it is done , Then pay me now in full!! I think I"ll make a sign of that. If nothing else it should get a few laughs..
 
Originally posted by rmajohns:
When Customers ask to know when the work will be done, I tell them... "well that depends, if you want it quickly don't leave any money. If you dont't care when it is done , Then pay me now in full!! I think I"ll make a sign of that. If nothing else it should get a few laughs..
Click to expand...
rmajohns:
pleasetellusyou'rejoking.
 
Oh my word!....if Sigmund Freud could see us now!

This topic is TOO good! I just bet the majority of framers (myself included, I hate to admit) WHO WOULD HONESTLY ANSWER, would admit that no deposit = faster job, full payment = slower job completions. Heck, we are "normal" folk, right!?

I can't tell you how often I correct my lack of smarts & discipline on this! Yes, another form of behavior modification I suppose, but I get really upset when I find myself doing an order that "owes me" over one that doesn't! I think I've even over-corrected......

Oh Sigmund?????? :eek:
 
I usually get at least 50% down. I always give the option to pay in full. I did discover though that the incentive to get it done is stronger if they still owe me. I am glad to see other people need that psychological advantage too. Either way I get them done.

Lately I have been telling some they can pay at pick up. These are the ones I know at this point and can trust. But,I'm reevaluating that because once you set a precedent it is hard to go back.
 
Tell me, Sherry Lee...how long have you been having these feelings of guilt?

First of all, let me repeat...we require 50% deposit on all custom orders. Now having said that, because we are a small business and not a high volume production shop, yes we prioritize our orders all the time. In a way it is an advantage. We are able to goose our cash flow or accomodate a customer who wants things sooner or at the last minute. Our schedule is not a rigid production schedule.

As for attitude...well, remember we are from Red Sox Nation. My customers don't seem to mind at all our up front approach and a little sense of humor.

We do display a "No Discounts-personal-professional-or otherwise. Please don't ask." sign above the sales counter, and though it may wilt a few violets, it prevents the discussion from even beginning. Many even comment on why anyone would ask for a discount.

As for guilt...does my landlord sleep at night or my kids' orthodontist, or Verizon, or Nstar, or anyone else on the list who takes their pint of blood every thirty days?

You know what I think Sherry? A cigar is a cigar. Sleep well.
 
I ask for 50%. When they finally say "ok, that's what I want." I say "That will be $xx now and the balance at pickup." No one has hesitated at all. About a third of the time they pay in full. Once in a great while someone paying in cash may say I only have $100 dollars when I asked for $1xx. I have let this slide as long as the offer was at least 1/3 of the total price.

Interesting comments about work motivation. I set all work orders in order by date they were recieved. Within the date I usually do the "easiest" or "one I want to see the result of" first. In my accounting system, a deposit is actually a liability and doesn't become a sale or "my money" until picked up. (Of course it is in the bank earning interest or paying bills.) Maybe that changes my motivation??

[ 02-02-2003, 12:43 PM: Message edited by: Cliff Wilson ]
 
I agree with Ellen. I want paid in full when they place the order and paid in full when they pick it up. I hate giving away free orders.


Actually, when I take an order I say "Would you like to pay half or all of the money." and look them straight in the eye (as I do when I tell them the price).

I have about half that pay in full.

I really, really do hate the feeling of just opening up the order, showing it to them and sending it home with no more money.
aargh4.gif
 
Vincent,

That did sound "guiltish", didn't it! Nope, I sleep REAL good at night.

We share your same policy with regards to deposits - 50% at time of the order. Those who pay in full are the customers that want to spend their "play money" while they have it.....for fear they'll spend the balance on something else. Our customers have no problems with the deposit.....and we've had no complaints about the time of completion either.


It would be rather nice to try Ellen's approach - see how that flies!
 
Here's a little trick I use that seems to work. I borrowed it from the fast food places. When it comes time to ask for the money, I ask if they'd like to pay for it all now and get it over with or put 50% down. The first suggestion you give them is usually the one they choose. If you just ask for a soda, they will automatically ask you if you'd like a large one. They have found that the power of suggestion is very powerful. The part of "getting it over with" seems to set up in their minds that then they won't have to deal with it later, just grab and go. Plus, I suggest that then they can have someone else pick it up when they come into town rather than making a special trip for it.
And, yes, I also look at the work order to see if there is any balance due before starting it. I usually go ahead and work on the PIF's but there is no anticipation of a reward when I'm done ;) ;)
 
Originally posted by Sherry Lee:
...no deposit = faster job, full payment = slower job completions...
Click to expand...
Two weeks is our usual completion promise, but we can often do it faster if asked. And we require a 50% minimum deposit for retail clients.

In any case, the due date is firmly established before there's any talk of a deposit. And the amount of deposit (or the total order) has absolutely nothing to do with how quickly or slowly the job gets done. It's scheduled, it's promised, and it's done.

I think making promises and keeping them is good business practice. A history of on-time performance and keeping promises builds trust, which brings clients back again.
 
Jim,
You are absolutely, 100% correct! And that is how we do business as well.

I was merely pointing out, as had been indicated by others, how our psyche sometimes WANTS to operate. That doesn't mean it DOES! After all, it is only "normal" (as we ALL are ;) , I'm certain) to be motivated by monies due! That does not mean that our psyche gets its way! Well, not all the time :eek: !!
 
Yes, I would like to also go on record that even though there is a psychological bonus when you know they owe you, I would never postpone one that was paid for. Just making a casual observation.
 
Jim is absolutely correct. We do all our orders in the order they were taken, unless we can't for some reason.
The idea of putting someone first because they owe money is rediculous.
You all sound like you are old hands at asking for money, which is good. I started this thread because I believe some people have trouble asking. If they get the idea it isn't so hard, and it is beneficial, maybe they'll get over that hurdle.
 
"With tax, that comes to XXX.XX. Would you like to take care of that today? Or leave a deposit?"
In practice, that works out to: check=deposit; credit card=total
 
RevBev

That is exactly what we say to our clients as well.
Your also correct in
check=deposit; credit card=total
Click to expand...
 
I might be different, But I usually tell the customer the price without the tax.... It sounds better to them. Then ask the if they want to put down 50% or more then they think about it and give half or the whole amount, But like everyone else, when the customer pays in full I'm happy untill I have to do the work. Hmmmmmmmmmm
 
I always tell the customer the price before tax, too. We always, always, always take at least a 50% deposit. The times that I didn't take the deposit (from ppl I know, too), I have been left with the framing and the art. Take a 50% deposit and they always come back. If they hesitate, I tell them that we cannot start work on the project until we have the deposit.

Somewhere a long time ago I picked this line up.

"Would you like to put 1/2 down today or pay in full?" This will almost always give me a payment in full.

I have had some fun with this by reversing the strategy. "Would you like to pay in full today or put 1/2 down? Saying it this way will almost always give me a 50% deposit.

Try it and see what happens. It is what the customer hears last that seems to click in their heads.
 
Since a few of you like to quote the price before tax, I'll tell you about an unsolicitated comment I got the other day. I had quoted a price (with tax) and the customer was writing a check. She got the check half written and said, "That was WITH tax, right? Because if there's one thing I REALLY hate, it's for someone to give me a price without tax and then give me the REAL total after my check is written."

I hate that, too - almost as much as I hate it when the clerk says, "I'll need to see a driver's license" when my license is already out of my wallet and sitting right on top of the check.
 
That's a good point Ron, thanks for sharing.

I often wonder about how that is perceived by the client.

I think that many of us may do this because of our shyness about pricing.

So do you say that'll be $400 plus tax for a total of $424, or that'll be $424 tax included, or that’ll be $424?
 
I usually say "that'll be $424 including tax." Or depending on how well I know the person (and because we have one of the highest sales tax rates anywhere) I'll say, "that'll be $424, including our governor's cut!"

Betty
 
I think it is a good idea to include the tax. I tell them the price and tell them it is including tax. I have to agree with Ron's customer. I was wondering, if you quote a price, and don't tell them the tax is not included, would they be able to, or have the right to, hold you to the quoted price? Seems to me someone would have the right to put up an argument.
 
I don't think it would be a valid arguement. If you are in a state that charges sales tax, why would you expect not to pay tax? I bought a used care recently. You can bet the salesman only said the price is 15999 and never said a thing about the tax. I was smart enough to know it would be added on.

As for what to tell the customer, my husband's line is.." Your order comes to $XXX and we have three choices for payment. You can pay in full today, or leave a deposit of 50% if that is more convenient. However, today we also have a special going on where if you choose, we will happily accept double the amount stated." He always delivers this with a smile and gets a laugh. And no, no one has ever taken him up on it..rats!

Sandie
 
I do quote the before tax price, but I also say, "the total is $200 before tax." That way the customer isn't surprised when I add the tax amount on. I learned that one the hard way....
 
Our tickets are handwritten, therefore I won't start writing the order up until the quote of "XXX.XX, plus tax" has been accepted. The "total or deposit" choice is offered at the very end of the order-writing task. Next comes "Sign in the red box and I'll give you that top copy." Then the trip to the credit card terminal and they're soon on their merry way.
 
I couldn't help but think, why not get the money up front and then tell yourself I will get their continuing business and referrals if I get the work done as I promised. That sounds like a pretty good incentive for a business that wants to grow.

[ 02-10-2003, 09:29 AM: Message edited by: ArtLady ]
 
Originally posted by RevBev:
Our tickets are handwritten, therefore I won't start writing the order up until the quote of "XXX.XX, plus tax" has been accepted....
Click to expand...
RevBev:

If you're writing 5 or more orders a day, then a POS system would undoubtedly pay for itself in a few months. If you write ten orders a day, the payback would be a matter of weeks.

There are all kinds of advantages to pricing/order writing with a professionally developed software program. Immediate, anytime price updating is a biggie, but there's also a professional appearance to clients (less likely to think your prices are negotiable), order histories, customer database information, management data reporting, speed, convenience, error reduction...
 
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