Yesterday, I had a heart to heart with retailers about late invoices, asking them to take a deep breath and call you. Today, it’s our turn to visit. Want to make sure there isn’t a disconnect on your end of the line.
Before you jump to the conclusion my heart rests solely with retailers, please hear me out. Like you, I have had late paying customers. I understand the impact that can have on one’s life. The bills still need to be paid, after all.
But I also understand the level of humility that comes with picking up the phone to make that call. Most retailers are, by nature, Type A-—over-achievers, head strong, determined…and proud. Admitting a shortcoming of any kind is like peeling their skin off. Admitting financial difficulty feels like the ultimate failure…even though it’s not.
So here they are, poised with telephone in hand, about to step off the high board and admit to a vendor they can’t pay an invoice in full right now. What will your reaction be? How will that soul baring admission be met?
If you hope to see a penny of that invoice, it best be met with compassion or odds are good that call will be the last you hear from them.
You’re struggling through all this too, I know. Your reps are living in fear that the next call they get from you will instruct them to “Get on that store about their invoice” (no one likes to be the henchman…if they do, I don’t want to meet them). Your credit line is stretched so thin you can see through it. And your deadline on the holiday production run is practically sitting in your lap.
The best…the only…way to recoup that revenue is to welcome those callers with open arms. The ones who are picking up the phone to make that nerve jangling call are the ones most likely to come through and pay when they have the money. They need to be nurtured, comforted, fed, and watered. They need to hear a tone in your voice that says “I see you as a human, and I get it.” They need to understand you don’t automatically assume they’re going out of business (trust me, those accounts won’t call).
They need you to treat them the way you’d like to be treated if you felt like the most exposed person in the room.
And yes, that goes both ways.
One thing I’d like you to please, please keep in mind, my lovely, admired vendors, is that-—sadly-—on the retail food chain, you place about number five at best. When the trickle of money comes into a store, it must flow back out in a very specific order, based on threat level. Translated, that means that bills get paid as follows:
1. Rent
2. Taxes
3. Payroll
4. Utilities
5. Vendors
You will never outrank numbers 1-4. If the door is locked, the state comes calling, employee vaporize, or the lights turn off, the store is toast. Yes, this is tough love time, I know. But you need to be aware that this is reality on the street.
(Did you notice that nowhere on there was “salary?” I can name all the retailers I know who are still paying themselves on one hand…and have fingers left over.)
So please, kind souls out there in Product Land, welcome your retailers with warmth and understanding when they call. They want to hand you money, albeit in different “chunks” than you may have hoped. Talk to your reps. Talk to your customer service department. Talk to your accounts receivable office. Explain to them that if they’re nice, the odds of getting paid increase exponentially.
If they aren’t, the odds of getting paid are pretty much zilch.
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Great blog Cinda!
Once again, right on target. I will say that in my 14 years in retail, the number of times that a vendor was less than understanding number in the single digits. And trust me, I and my fellow retailers who were in New Orleans at the time, had some really bad times through which to work. Only one vendor (out of over 50) called after the storm demanding payment (and this was 3 weeks after, and well before we were even all allowed back into the city) , while so many more found me and asked what they could do — send $$, food, goods or give me and my employees a place to live until we could get back home to Louisiana. Now that didn’t happen because I was so great – it was because every one of those vendors were friends, compassionate businesspersons, and decent human beings who understood my plight. And I would bet that we Retailers will find they haven’t changed in the last few years. I value my relationships with my vendors and hope that they feel likewise. We are partners in this world of retail business and partners should be straight with partners. When we call, I hope that they will have listened to you, Cinda!
On all my purchase orders I state that terms will be paid using date product is received in store–not the date it leaves the vendors shipping dock. When you really think about the purpose of a vendor extending terms, it is to give the retailer a running start in selling the product. I have been very firm with this policy — there have been times where I got product in the store two weeks after I recived the invoice–which totally defeats the purpose of terms and impacts my cash flow.
I’m curious if any other retailer has this same philosophy.
Ann, we used to have that same philosophy. And, for 46 years in business, it worked! But, with the recent downturn, and with our payments being “slower” it just hurt our credit score. In mind my an invoice was late 14 days. In their world, it was over 30! Big difference to your credit score. Now if something is more than 12 days past the invoice date, I just send the a/p an email explaining the situation.
Just to let you know, as a Vendor, I am sending this to our A/R people…. We appreciate so much, when customers do call if they are going to be late, and as a business owner it has always been my policy to work with anyone who has openly communicated with us…
And we have been stressing to our employees that you have to think of the retailers in these times, but even with that, occasionally a short, curt note goes out about a past due invoice… I’m watching for those, and use the opportunity to teach our folks to remember just what your post says… that is a person who is trying to make it work in hard times…
But I am happy to have the opportunity to share this post from the retailers perspective. We have been very fortunate to have a good business in hard times and we want to spread that fortune to others… now more than ever we have to support the retailers… and I know that goodwill will come back in spades. Glad I found you!