october2021 - 44

Skips cost more than you may think
Make it clear you expect to be paid and do your due diligence on new customers.
By Alan Sipe, Contributing Editor
A
bout 10 years ago I was
at the awards ceremony
for one of the mobile distribution
majors where motivational
speeches are given and,
with lots of fanfare, the company
announced the award winners
for region, district, and individual
jobber sales excellence. In addition
to the sales awards, there was
also an award for the mobile jobber
who had the best record for
collecting money. Why I remember
this so well is that when the
speaker announced the recipient
and the winner walked on stage
the audience went wild. This guy
had to be 6'6 " with hands like
Michael Jordan and was built like
a human jackhammer! You could
hear the jobbers in the audience
saying, " Who on earth would stick
this giant for his money? "
Unfortunately, for you averaged
sized mortals, collecting your money
can be a real challenge. Bad debts can
range from three to five percent of a
jobber's annual sales, reports show.
That could be as much as $40,000 if
you are an $800,000 jobber. According
to the 2021 Professional Distributor
Reader Survey, collections are a critical
issue for 61.6 percent of readers.
FINANCIAL RAMIFICATIONS
Lets look at this issue financially.
You sell a product for $145 with
$30 down. Your receivable is $115.
Granted I am using estimated cost
and profit numbers, but you will
need to sell about $500 just to cover
this loss. So, for every buck you
don't collect, you need to sell about
$4.50 just to break even.
* Sell price: $145
* Cost of goods sold: $87
* Gross profit: $58
* Estimated operating costs etc.
(25%): $14.50
* Net profit (NP): $43.50
* Down payment: $30
* Receivable: $115
* Customer skips, amount lost: $115
* Sales needed to just make up the
loss: $383.33
* Lost NP on $383.33 of sales: $115
* Sales needed to get whole: $498.33.
Collections are a " not fun " part of
a mobile jobber's work but of the three
best ways for you to go out of business,
receivable write-offs are right up there
with not making your calls and not
asking for the order.
When you " tote the note, " you are
functioning as an independent lending
bank or credit card company and the
first thing a bank does is make sure
they know who they're doing business
with. As you know, a bank will
not lend you a dime until they know
just about everything there is to know
about you including your shoe size.
How about you? When a new technician
shows up at one of your stops,
do you do your due diligence on their
creditworthiness before you trust
them with your money?
PREVENTING SKIPS
Start with getting the new customer to
completely fill in and sign your customer
profile information document.
Call their previous employer. Take a
picture of their driver's license and
their vehicle including the license
plate. This may seem invasive to you,
but you are lending them your money.
You have a right and need to know
44 Professional Distributor I October 2021 I VehicleServicePros.com
who you're doing business with. Even
if this technician is paying cash each
week, getting their credit card information
is another way of hopefully
insuring payment.
When your customer realizes that
you know everything there is to know
about them, they are a bit less likely
to skip.
Be 100 percent sure they understand
the repayment terms you are
offering them. Give them a document
with everything spelled out and get
a signed copy that they acknowledge,
accept, and understand your terms of
repayment. The extra time you invest
up front on this issue, the happier you
and your customer will be.
As a side note, I realize that there
are professional " skippers " who get
something on credit from one jobber,
pawn the product, keep the cash,
and never pay back a dime. You might
consider subscribing to a service that
communicates mobile jobber skipper
information on individuals nationwide.
As a subscriber, you provide your skipper
information to the database as do
the other subscribers. You then simply
look up your potential new customer
to see if they have a record of skipping.
As their database grows, so does your
access to the bad technicians.
Take baby steps with a new customer.
As this individual makes their
weekly payments on time without a
hassle, you can slowly increase their
credit limit. Beware of the customer
who finances small purchases repaying
promptly and then goes for a major
tool storage or equipment purchase
borrowing thousands. This is the
standard tactic of a conman and professional
skipper.
http://www.VehicleServicePros.com
october2021

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