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Talk me off the ledge!!!

proturn

Stainless
Joined
Jan 20, 2010
Location
zimmerman, mn.usa
I have really had it and am extremely tired of chasing my money all the time. To whoever the fuck stick was that got this industry hooked on net terms.....FUCK YOU! Fuck your parts, fuck your cash flow, fuck your sob story on why you cant pay on time, fuck QUOTING, Basically FUCK YOU!:mad5::mad5::mad5::mad5::mad5::mad5:

I've been in bidness ;) now almost 5 years and I'm really close to pulling the plug on whole damn thing! I do have a few really good customers that always pay on time and we appreciate them immensely. :nopity: Unfortunately their are more companies we do work for that don't follow our terms and keep us on the hook for months. I wish I could go to the customer store and pick out new ones but those of you that know this game know that is not reality.

Tomorrow I'm sending out a letter to every damn one of my customers regardless of payment history and laying down the law and doing away with terms all together. The bottom line IS the bottom line and we cant afford to be a credit card anymore. It's too stressful, expensive and most of all unpredictable.:crazy:

So here is my question, Do i go ahead with said letter and test the waters, lose some customers and possibly offend some of them(oh well), or, do I start inventorying everything for the the auction and wipe my hands of this industry and buy a....Wait for it.......... hot dog cart. I'm just fit to be tied and am looking for some experienced advice. Roast away boys!:smoking:

As for that auction, don't start wringing your hands yet. I refuse to pay uncle sam the gains taxes so the only equipment to be sold would be the ones that we dont own yet.:scratchchin:
 
I have really had it and am extremely tired of chasing my money all the time. To whoever the fuck stick was that got this industry hooked on net terms.....FUCK YOU! Fuck your parts, fuck your cash flow, fuck your sob story on why you cant pay on time, fuck QUOTING, Basically FUCK YOU!:mad5::mad5::mad5::mad5::mad5::mad5:

I've been in bidness ;) now almost 5 years and I'm really close to pulling the plug on whole damn thing! I do have a few really good customers that always pay on time and we appreciate them immensely. :nopity: Unfortunately their are more companies we do work for that don't follow our terms and keep us on the hook for months. I wish I could go to the customer store and pick out new ones but those of you that know this game know that is not reality.

Tomorrow I'm sending out a letter to every damn one of my customers regardless of payment history and laying down the law and doing away with terms all together. The bottom line IS the bottom line and we cant afford to be a credit card anymore. It's too stressful, expensive and most of all unpredictable.:crazy:

So here is my question, Do i go ahead with said letter and test the waters, lose some customers and possibly offend some of them(oh well), or, do I start inventorying everything for the the auction and wipe my hands of this industry and buy a....Wait for it.......... hot dog cart. I'm just fit to be tied and am looking for some experienced advice. Roast away boys!:smoking:

As for that auction, don't start wringing your hands yet. I refuse to pay uncle sam the gains taxes so the only equipment to be sold would be the ones that we dont own yet.:scratchchin:


Feel your pain man. That is such a hard position to be in.

I think you should send the letter but call your good customers, thank them for treating you well, and explain why you're forced to do this. You can communicate all the things you need to communicate by calling the people you like dealing with and letting the letter stand alone with the others.
 
Don't send the letter but figure out how to deal with the customers who are riding you. Except for your good existing customers, Start a new policy that if the order is more than a certain amount require a 50% deposit to cover your labor and materials, and the rest upon delivery. For the customers who pay you quickly, give them curb service and ask for more business. Another thing, don't price your work low hoping you will generate more business or think that you will lose money if the customer walks because of the price. You are better off jettisoning work that is not profitable. People don't mind paying a fair price for good work. And remember this: there is no limit to the amount of free work you can do as long as you are willing to do it.
 
What sort of customers are you dealing with? Are these places local to you, or are you shipping the parts out?

The letter may do some good. However, if you have spoken to these people already, they know the situation, and are willfully disregarding your policy.

If you really want to get the money out of their hands, you need leverage. Declining to quote their work will save you the hassle, but there are a lot of hungry shops out there, so it may not hurt them much.

Usually the only leverage you have is to refuse to ship parts that you have a PO for until their account is current. If they need them, they will pay. But, don't be surprised when they don't come back.

There is no easy answer to this. If it makes you feel better, it does affect everyone. Hang in there.
 
Don't send the letter but figure out how to deal with the customers who are riding you. Except for your good existing customers, Start a new policy that if the order is more than a certain amount require a 50% deposit to cover your labor and materials, and the rest upon delivery. For the customers who pay you quickly, give them curb service and ask for more business. Another thing, don't price your work low hoping you will generate more business or think that you will lose money if the customer walks because of the price. You are better off jettisoning work that is not profitable. People don't mind paying a fair price for good work. And remember this: there is no limit to the amount of free work you can do as long as you are willing to do it.

I like the money up front Idea but am uncertain of the sustainability of it, sooner or later it ends up in terms it seems.

What sort of customers are you dealing with? Are these places local to you, or are you shipping the parts out?

The letter may do some good. However, if you have spoken to these people already, they know the situation, and are willfully disregarding your policy.

If you really want to get the money out of their hands, you need leverage. Declining to quote their work will save you the hassle, but there are a lot of hungry shops out there, so it may not hurt them much.

Usually the only leverage you have is to refuse to ship parts that you have a PO for until their account is current. If they need them, they will pay. But, don't be surprised when they don't come back.

There is no easy answer to this. If it makes you feel better, it does affect everyone. Hang in there.

There really is no easy answer so far. The worst customers are local and the best are clear across the country, it's backwards I know! Thank you to all that have replied. Keep them coming.
 
The only thing that I know is that I have only 2 customers that I actually trust and am comfortable with giving them net 30. Funny thing is one of these never asks for it, he pays for it at pick up or if I take it to him. Not to say that I don't do it with some others, but I am uneasy about it and have had to fight for payment on a few, but the 2 good ones will get good guy status with me and get preference over everyone else.
I am also getting deposits on some jobs before I order any material.
 
I could not agree more proturn. net payment terms are evil, and I never have understood them. And just starting out, I will be laying down the law every single time I take on a job from a new customer the terms will be 100% prepayment. successive orders will be 50% up front. 50% upon delivery. I know i will be greatly limiting my work potential. But I totally agree! We are machinists, not bankers! If we would all do it, they wouldn't have a choice.
 
That super turning man job isn't related to the topic is it? That was a hell of a part, especially for not grinding it. You do work others won't take, I'm not a shop owner or anything near it. Screw net terms if that's your typical work.
 
I know if sucks, but you guys are dreaming if you think large customers are going to pay you on delivery. It just doesn't work like that. Net 30 is the industry standard.

When I do design work, I request half after design review and the balance 30 days after delivery. This is usually not a problem for customers. 16 weeks design and build for a couple of $10,000 fixtures plus 30 days net leaves you hanging out there pretty far.

If it is any consolation, it can be worse, much worse. If you want to be a Tier 1 automotive supplier, you need a hell of a good line of credit. Some OEMs make you wait a minimum of a year to be paid back for your tooling. Large suppliers metal stamping plants, injection mold houses, carpet forming shops, glass shops, etc may be waiting on invoices in the millions of dollars at any given time.
 
I used to send out everything COD.
I got tired of UPS and FedEx with the COD charge, losing checks, and customers complaints. in 2001 I switched to net 10 terms(based on delivery date at customer dock) on any invoice under $800.00
Anything above that payment prior to shipment.
Anything real odd 50% with the order.
For the most part, it works.
I was told when I went into business have 6 months cash on hand to equal all the possible bills needed to run the business. I thought the advice was unrealistic, but if I did have that on hand, I wouldn't worry about the rent because invoice payments are late.
Add that I'm usually a 1 man show, and illness or family issues or vacation(whats that?) shoots your budget to crap

One of the things that keeps me going, and it has been echoed by other shop owners near me, is that after working for me, I can't work for someone else.
I've been on the other side of the conversation when someone says "I used to have my own business, but......."
I refuse to give up, the edge is just another bronze chip festerting in your thumb.
It will eventually go away, just work around it till it festures and pops, then you'll feel better

Mike
 
I know if sucks, but you guys are dreaming if you think large customers are going to pay you on delivery. It just doesn't work like that. Net 30 is the industry standard.

When I do design work, I request half after design review and the balance 30 days after delivery. This is usually not a problem for customers. 16 weeks design and build for a couple of $10,000 fixtures plus 30 days net leaves you hanging out there pretty far.

If it is any consolation, it can be worse, much worse. If you want to be a Tier 1 automotive supplier, you need a hell of a good line of credit. Some OEMs make you wait a minimum of a year to be paid back for your tooling. Large suppliers metal stamping plants, injection mold houses, carpet forming shops, glass shops, etc may be waiting on invoices in the millions of dollars at any given time.

Teet 1 is a expensive sandbox to play in! I dont plan on getting AS9200 or ISO certified and living in a credit line doesnt sound appealing either. I would rather become a leach on our social system (see 47%) than wear those golden hand-cuffs. Shit, if you cant beat them, join them right?
 
I Shirley wouldn't send that letter to your good customers. :eek:


I started with the "No Quote" treatment to a certain customer.
Told them that since they can't pay for what we already doo for them now (back then) that there was no point quoting more part numbers.

Within 6 months or so I had cut them loose anyway...

Now we are waiting to see if we will ever git paid for the last shipment. :gossip:



I recommend hardball before canning them, but don't stir a pot that you aren't first willing to lose.



Is this a MinniConsin thing or what all of a sudden?
The long winter have you guys all Cabin Fevered or what?


---------------

Think Snow Eh!
Ox
 
I would send your letter to the worst offenders. Your best customers will not understand a letter, and will get annoyed.

I know what you are going thru. I am very fortunate that my slow one is only one of the big 6. The other 5 pay on delivery or net 10. That is one other thing I do, is give a discount of 2% for net 10. The customers usually love that, and jump at the chance to save $.02 Most of my work, I lose $100 because of my net 10 discount, but I have the money sooner.

Hang in there. Oh, wait, your close by me. Get out now. I will take your work.:D

Good luck,
Josh
 
It gets worse. The foundry I worked in was TS certified. We had to do all the BS of ISO plus we had to have continuous improvement. Our quality rejection had to continually go down to stay certified. Every single piece of paper that left the engineering office had to have a revision number and be updated for every engineering change.

When you are a Tier 1 supplier, your customer can charge you for sending them a bad part. Most of the time, they go ahead and use the part, then charge you for rework. You don't get paid for it, you can't get the parts back to see the problem, and you have to pay them to tell you it's bad.

Then they do capacity studies to see if you can handle the work they might give you.

You just can't charge them enough. You could mark up tooling 100% and still lose your ass with the hours of documentation they require.

I can remember a certain transmission maker who demanded that all tooling be stamped as their property (which it is), then they need pictures of the tools, copies of the invoices, and they do an on site tooling inspection. This is all before you ever make a single part. They want to see every thread gauge, ring gauge, CMM fixture, core box, match plate, everything. Then they still make you wait a year to get paid.

Cheer up my man. The grass is not always greener on the other side.
 
I was told when I went into business have 6 months cash on hand to equal all the possible bills needed to run the business. I thought the advice was unrealistic, but if I did have that on hand, I wouldn't worry about the rent because invoice payments are late.

..and if I had a million dollars to buy a new machine, I'd likely keep it in my pocket...

I refuse to give up, the edge is just another bronze chip festerting in your thumb.
It will eventually go away, just work around it till it festures and pops, then you'll feel better

Mike

Oh - that's goooood!


---------------------

Think Snow Eh!
Ox
 
Is this a MinniConsin thing or what all of a sudden?
The long winter have you guys all Cabin Fevered or what?


---------------

Think Snow Eh!
Ox

Cabin fever is not the words for it. In the summer the big doors are open 24/7. I hate having them closed. I also hate the cold, but if I did pack up and leave, I'd go to Alaska. WTF:nutter:

Remember my thread about alcohol.http://www.practicalmachinist.com/v...es-alcohol-make-shop-ownership-better-261342/ It wasn't entirely because of insurance. I need daylight.

Josh
 
Actually I was referring to Dave K's exact same thread from a week ago.

Now run along and get pics of that Monarch already!
Bin waiting for what - 3 bloody years now?
Y'aint got time to be screwing around here!


----------------------

And worsh behind your ears this weekend too!
Ox
 
I am sympathetic and don't have a helpful answer. Can just relate our experience. I've been lucky to establish a business that competes on service not on price. I've been lucky to have some luxury of choice for what kind of work to pursue. It's definitely not a business based on being the low bidder.

Our local customers on the job shop side range from a bunch who expect to pay in advance on delivery - some as a matter of pride or principle won't take parts without paying, the majority on net 15 who pretty much pay net 15, a handful of larger businesses who pay net 30-45 but at least are consistent about it, and a handful of predictable slow payers. I've fired a couple customers who just weren't worth the trouble to deal with. I haven't fired any slow payers, I like them and the work, and at least they're consistent. They get charged a bit more than the rest. The adjustment is a figure that leaves me feeling indifferent - if they keep sending the work and pay slow, I'm OK with it - if they take the business elsewhere, same deal.

We do a lot of small jobs for folks far away and simply require payment in advance via paypal or visa. (We don't do big jobs for folks far away because if they're just shopping around for bids, we won't be the low bid - I rarely bother quoting for folks out of the area.)


So anyway what blows my mind about net terms is that almost none of our major suppliers will offer it to us. All but one of them has our credit card on file and would rather pay the 3% than to receive a check in 10 days or even a check on delivery.

I think this is the new reality for new businesses. The suppliers aren't going to bump their long established relationships, but they sure aren't interested in new credit accounts. I could see this for orders in the $hundreds where open account isn't worth the trouble, but these are always in the $thousands and the bank charges are significant.

The one old business that does offer terms is ... casual. They called a couple years ago saying I was 9 months late with an invoice - which I was, I'd simply missed it. They don't send statements & never sent a notice. Kinda wonder if that's what they expect from their long established customers.
 








 
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