Help With New Customer

[moonlight machine]

Curious on some possible guidance here.

I am a very new cnc shop. I've been running a small shop on the side for a while mainly making projects and parts for my own hobbies and selling them. After doing that for a few years I've gone full time at my shop and looking for work outside of my own parts and going through gowning pains of learning how to source work. I recently had a customer come to me wanting to shift manufacturing from China to America and ended up at my shop. After some discussion and a quote we had agreed to move forward.

The issue I am having is their old production they were totally hands off from what I can tell, had no idea how to open drawings or where they were, missing dimensions on drawings, seeming surprised by the cost changes from 30 parts to 500 parts etc. I also give them quotes and ask for some type of approval/material fee to move forward and radio silence for weeks. After the radio silence there is panic about low inventory and they are requesting a rush on some parts. I wrote a new quote for the rushed parts sent it over and it was long enough before they got back to me that material costs have raised along with the wait time for material to be cut which leads to more confusion from their end.

My question is at what point do I stop bending over for this company and spend the time on souring new work or my own side projects.

Sounds like they need to be an X customer.

 

[Garwood]

You don't do terms?? How do you pull that off? Doesn't that limit you to piddly little customers? In my experience my big customers aren't set up to do COD.

I started my venture into machining strictly making my own products. As my shop, experience and capabilities have grown, I've taken in machine work from others. I can choose what I do and don't do because I don't rely on that work.

I have some piddly customers, sure. They bring me parts to repair. There might be jobs only worth a $50 sometimes, but most of the time repair jobs are more like $2000-$3000 in shop labor. This is boring mill, heavy lathe and welding type stuff. A lot of tricky boring jobs.

Last fall I did a rush job designing and building stamping tools for a fortune 500. I got a phone call from a project manager because a friend of a friend threw my name out in a meeting. They sent a courier with the prints and parts. I fired off an email describing the scope of work and my terms. Their accounting emailed asking for my ACH info and the next day I had $15k to start the project. When I delivered the tools and the example parts I'd run off they wired the balance, no problems with COD at all.

So, no, I don't think it's limiting me personally not offering terms. I think I avoid the type of work that other shops that offer terms are doing. Starting out making your own products is a strange introduction to the world of machining, but it's learned me a lot about a lot of strange stuff others aren't familiar with.

 

[jackal]

I've been running own shop for 14 years now.
In the beginning I had some customers like this.
A big printing company that made food packaging boxes.
They would say they were in a rush, and then I would hear nothing.
I did work for them for a year.
They would ask for a quote for 20 large assemblies, then tell me to make and ship them 2 at a time.
Come to find out , they were just using me to beat down the prices from the usual shop they've been using for 20 years.

They drug their feet, and I bought enough material for only 10 assemblies.
At the end of 10 pieces delivered, they cancelled the rest of the order.
Luckily I didn't buy more material.
It took almost a year to get paid from them.
I knew some of the workers at the other company.
They told me later that that was what they were doing.
This was a nationwide company, too.

Be careful

 

[john.k]

My old man had a simple rule......never give credit to anyone with a pencil moustache,slick back hair ,flashy convertible ,or a dumb blonde on his arm......he passed in 1984,and I think things have probably moved on since then.

 

[Garwood]

My old man had a simple rule......never give credit to anyone with a pencil moustache,slick back hair ,flashy convertible ,or a dumb blonde on his arm......he passed in 1984,and I think things have probably moved on since then.

I was raised with:

"Cash talks and bullshit walks"

 

[joecrs]

Curious on some possible guidance here.

I am a very new cnc shop. I've been running a small shop on the side for a while mainly making projects and parts for my own hobbies and selling them. After doing that for a few years I've gone full time at my shop and looking for work outside of my own parts and going through gowning pains of learning how to source work. I recently had a customer come to me wanting to shift manufacturing from China to America and ended up at my shop. After some discussion and a quote we had agreed to move forward.

The issue I am having is their old production they were totally hands off from what I can tell, had no idea how to open drawings or where they were, missing dimensions on drawings, seeming surprised by the cost changes from 30 parts to 500 parts etc. I also give them quotes and ask for some type of approval/material fee to move forward and radio silence for weeks. After the radio silence there is panic about low inventory and they are requesting a rush on some parts. I wrote a new quote for the rushed parts sent it over and it was long enough before they got back to me that material costs have raised along with the wait time for material to be cut which leads to more confusion from their end.

My question is at what point do I stop bending over for this company and spend the time on souring new work or my own side projects.

You need to keep in mind a lot of these people you are dealing with may be fresh out of school and not have much real world experience. I have had to deal with this with engineers for many years, the ones that are willing to listen are well worth a bit extra time on your part you can build a good working relationship with them. Now as for the ones that do not listen my advice is walk away fast, I had a customer I did work for for over 20 years hit me with a new 90 pay period I told them no way. I had a meeting with the "new" guy in charge his advice to me was go take a 100k loan set up a separate bank account and use that to pay your bills until we pay you. I started laughing and then quickly found out he was serious, never did another job for them again and that was after over 20 years. They never paid on time when my terms were net 30 no way I was letting them go 90. It was a pretty good customer too but if you do not get paid it really does not matter how much work you get. This was a case where as some suggested a meeting was the best solution. Do not write them off until you find out what is really going on. You will be able to pick up right away if it is inexperience or just another PA trying to screw some one, and yes there are a lot of them out there. Turns out the "new" guy I was talking about made a commission on every dollar he saved the company so his commission became more important that anything else, they lost a lot of vendors and have quite the reputation locally.

 

[UptownSport]

I don't do terms. COD or find someone else.

People may describe customers as "Needy," "Flakes" or "Difficult",
but they'd be darlings relative the sweet, prompt and articulate one that orders
Acme widgets of finely ground unobtanium in Whitworth thread and doesn't pay,
or worse yet doesn't pick them up, so you get to look at them everyday for ten years

 

[Fish On]

You don't do terms?? How do you pull that off? Doesn't that limit you to piddly little customers? In my experience my big customers aren't set up to do COD.

They're not set up to do COD, I'm not set up to do terms. Someone has to give. If you're running a job shop making parts to customer prints, quoting against other shops, you have to give, because if you don't, someone else will. If you're a specialty shop that deals in something specific, or make your own products, they'll find someone with a company credit card to pay your bill. Most of the big companies that I deal with actually pay before the order leaves my dock.

 

[jccaclimber]

The huge places I've worked like to say NET90 and pay on day 89.
The medium sized places I've worked we call up the new supplier and say "I'm sending you a drawing, I need it in my hands by X date, and I can give you the credit card information and an email authorizing work if you agree not to bill until you put it in the box to ship to me. It's quite amazing what providing a CC number instead of saying "Our purchasing group will begin onboarding you as a supplier on the 1st of the month" will do.

Back when working at larger places it was as above, someone blinks first. Just depends on how bad you want your stuff. If it's a small shop we've never used then the engineer gets told "find another supplier" because they've been burned too many times and would rather be slow but more certain.

 

[jccaclimber]

Getting off topic, but somewhat relevant: if your customer offers you payment, take it! If the cost of that payment method breaks the budget, price it in.
At the first place I worked out of school they were sometimes thrifty and other times just cheap. Places that had a discount for prompt payment instead of the full NET30 got paid fast, but if they missed that window it was the “when we get to it” pile.
One of our shops in Indianapolis did a lot of walk in work for us. Run the intern or junior engineer over, let them watch and learn, get parts in a couple hours. I was lucky enough to be that intern then engineer. Often the owner would greet us by nervously asking if we’d gotten his invoices, and if anything was missing. Makes sense now that he wouldn’t want more work if we weren’t paying for any of it. I’d been told to keep him happy, so I’d honestly offer him the company credit card on the spot both for that day’s work and for any past due items. I don’t think he ever accepted, and I’ll bet he lost more than 3% in stress, extra phone calls, and opportunity cost waiting for our check to eventually arrive. Really a pity because I learned a lot from that guy, even if some of it didn’t sink in until a few years later.

 

[Plane Parts]

Tell them time and materials. No need to quote as they are looking at every other shop in the region. If they are desperate they will go that route.