R Ball fired a customer - should I?

[donek]

R Ball posted his woes over a bad customer. I'm looking for some advice regarding one of mine.

I have a problem much bigger than an individual customer or small dealer. This guy has become a significant part of my brand. He doesn't speak English any better than google translate though.

An international distributor I've worked with for 3 years now has done phenomenal things with growing our brand overseas, but every year there's a problem with the payment. This year, he got his order in just after the deadline. It would have accounted for a significant portion of our annual sales. He's now 90 days past due on his deposit. I've been forced to take on work in it's place. The problem is, that work only fills the gaps, it doesn't grow my brand. It also makes it virtually impossible to fill his order should he ever decide to pay. So, here's the dilemma.

It's too late to find another vendor in the same region for this season and may even prove difficult in the future.

If he pays, do I hire extra help to fill the order during a time that it could prove counter productive to my US orders. If I do how much should I penalize him for his behavior? If there is no penalty, he'll definitely take the attitude that "they filled the order last year on my time frame, they can do it again."

My concern with not filling the order is the damage it will do to our image in that market. I have no doubt that he will blame us for not filling the order rather than taking responsibility for his actions, further damaging our reputation. Anyone wanting our product will be told "They couldn't deliver any boards this year."

I could start filling orders direct to this country as I did in the past, but ultimately that hurts our ability to find a new distributor as they want exclusivity. Selling direct also gives the customer a false idea of the cost because they never understand the cost of importing until they've paid the import duties. This hurts a new distributors ability to win customers who think they could have got it for less if they were able to order direct, which in reality is false.

Any advice? I could probably go on and on about the pros and cons of different scenarios, but don't want to bore you guys. Tell me what you would do.

[kevin]

I know your brand as a skier it carries a lot of weight even up here
This is not advise the easier solution is get job insurance then a overdraft to carry your overhead

My two cents I think your on your way to another level with sales .Get marketing help {your amazing at making boards and designing stay in the shop] I just finished an audit they did not me CRA 150 lines of error it stressed the hell out me .My son did all the work and won he told me "you have to stay in the shop creating not getting burned out with this nonsense" My son is a business major .By the way I did maybe 2 hrs of the work .On one of the errors the CRA told me the auditor didn't know which company she was auditing that's why they CRA made the mistake .The point is a lot of so called professional who can sink you .If my son didn't fix this I might of had to close I had no idea what to do

Giving exclusive that's you need expert advise but be careful a lot of bad advise or incompetence

Most business drag out payments

[bleeth]

An order is not an order until the deposit is paid. I would say it is time to have a heart to heart with him and essentially read him the riot act. Giving up a "good" client who gets worse and worse with payment will only put you in a tough spot temporarily. He needs to understand your rules or you need a new distributor.

[donek]

An order is not an order until the deposit is paid. I would say it is time to have a heart to heart with him and essentially read him the riot act. Giving up a "good" client who gets worse and worse with payment will only put you in a tough spot temporarily. He needs to understand your rules or you need a new distributor.

Read the riot act many times already with no results.

[chiloquinruss]

Check with your banker. There is a function called 'factoring' where the bank becomes your accounts receivable department and your CREDIT manager. THEY become the bad guy in the good guy bad guy scenario. They approve the credit, they do the collecting. The percentage rate was relatively low given our volume, we had three computer stores at the time. Google 'factoring receivables' and you will see there are lots of options. It may be to late for this particular customer, but . . . . I wish you well. Russ

[shilala]

I'd fire him and wait for someone to come looking for me to fill his role.
But I'll admit that I have always had zero bullsh1t tolerance, sometimes to my detriment.
The main thing is that I've remained happy. The time and effort I put into that which made me miserable could be focused in another direction I was looking forward to developing but didn't have the time.
Ask yourself if you can live without him, and if you can, erase his act from your life.
Money is money, but it not the end all be all. Your talent will certainly continue to put food on the table, brother.

One other thing to consider...
If he's doing you this way, how do you think he's treating his customers? And in turn, what kind of face is he putting on your brand in his area?

[donek]

I'd fire him and wait for someone to come looking for me to fill his role.
But I'll admit that I have always had zero bullsh1t tolerance, sometimes to my detriment.
The main thing is that I've remained happy. The time and effort I put into that which made me miserable could be focused in another direction I was looking forward to developing but didn't have the time.
Ask yourself if you can live without him, and if you can, erase his act from your life.
Money is money, but it not the end all be all. Your talent will certainly continue to put food on the table, brother.

One other thing to consider...
If he's doing you this way, how do you think he's treating his customers? And in turn, what kind of face is he putting on your brand in his area?

Very good points Scott. I have hit the point where I don't loose sleep over this type of customer anymore, but I do try to work the problem. I continually arrive at your solution, but who knows what inspiration may come.

[donek]

Check with your banker. There is a function called 'factoring' where the bank becomes your accounts receivable department and your CREDIT manager. THEY become the bad guy in the good guy bad guy scenario. They approve the credit, they do the collecting. The percentage rate was relatively low given our volume, we had three computer stores at the time. Google 'factoring receivables' and you will see there are lots of options. It may be to late for this particular customer, but . . . . I wish you well. Russ

I called my Banker on your advice. Unfortunately this solution is only useful if you are confident you'll get paid by the customer or can resell the exact same product in your market. Unfortunately that is not the case and hence why I won't start production without a deposit.

[cip]

Dave is right, a client that doesn't pay is a client you don't want or need. Get a new dist.

My $.02 worth.

[richards]

Anyone building a custom project that can't be resold to someone else MUST collect up front, before the work is done. Don't allow anyone to dictate to you how you run your business. You've made the investment. Charge all customers in advance for anything that you can't resell to someone else.

[bleeth]

Well if you already made the facts of life clear to him and it didn't work then get a new distributor. Better short term heartburn than long term cardiac problems.
You have a hot product. He is far from the only guy who can help you in that market.
BTW: Who pitched whom on him being the distributor? Did you do your due diligence in qualifying his client relationships and credit worthiness?
He may not speak English (and that's OK-no need to be xenophobic) but plenty of his retail clients do. Call a couple and check up on him. That is not only OK but the client will actually appreciate that the manufacturer is concerned for his welfare. This check-up can easily be handled in such a way that the client doesn't know you are actually investigating a concern.

Side note to Mike- what's goin on-give me a call.

[kevin]

Dave is right
point being right now your customer is bring no money from this client either you finance him with your credit
I would hop on plane go to New Zealand the skiing is great now give demos get your name out ride that wave
Hit trade shows
knock on doors
With the exposure you've had you can open up a lot of doors remember people have short memoirs remind them
Spread a rumor Shawn White might have won if he had a Donek
That client is holding your company back

I had a similar problem in Jan reached out to the designers way better paying then GC and fun to work for .Got rid of burn out clients having fun now

This is not advise I also realize your business is very competitive and I know little

[harryball]

Slow to pay doesn't bother me so much. Failure to deposit means they are not a customer and I ignore them until they are. I will not start the job until the deposit is made and the delivery clock doesn't start ticking until the job starts.

One trick I came up with for slow pays was to offer a discount if they paid on time. In reality, I added a late penalty up front and forgave it if they paid on time. This worked well for the few I applied it to, but one guy was a real pain.

I agreed to net 30 days to pay and the guy always took 45 to 60 days to pay AND took the discount. When confronted about it I'd get the same old carp. So I added a "Net 60 Charge" and sent them a bill.

The bill looked something like this...
X) product A - $$
X) product B - $$
X) labor - $$
X) Net 60 Terms Fee - $$

Total Due $$

Refund of Net 60 Term Fee will be made IF payment is received in 30 days or less.

The guy got bent out of shape over it, but I stood to it. I told him if he paid any less that the total due I'd stop all business with him, reject his check and turn it over to collections for the full amount. I told him I was sick and tired of being taken advantage of... in short I unloaded on the guy.

We did business under these terms for about a year before he finally closed his business down (no surprise there) but I never had another payment go over 30 days. We'd immediately send him a "refund check" for the difference after every payment.

Sometimes, you just gotta think outside the box.

/RB