When you go to the grocery store and check out, does the cashier ever look at you and say, “Don’t worry about payment right now, I’ll just send you a bill?” If that happens, I would like to know where and when so I can go there too! When I was a child, there was a little corner store where you could put food and gasoline purchases on your “account” and settle up on pay day. That was long ago, before credit cards, and everyone knew one another, so you had better pay the bill.
It could have started with the plumber making the repair without the home owner being home. They entered the house with the key that was hidden outside, if the door was ever locked, and the customer was at work. They may have left the bill on the counter, or mailed it out in a couple of days.
Then there was the business owner that would not let his technicians bill anything. They did the work, wrote up what they did and the parts they used, and took that information back to the office. The owner, or someone he designated, actually prepared the invoice and mailed it to the customer. Generally, by the end of the month, a check would arrive in the mail. Those are not the days any longer. In order to keep your business in business, you need to collect at the time of service.
There are many plumbing companies that are having excellent sales revenue and are cash poor. They are having difficulty making payroll and paying their bills because they have billed just about everyone and the are not being paid promptly. Yes, there are some companies that cannot pay right this minute, but you would be surprised how many that can. The great plumbing myth is, we have to bill the customer. That is completely false!
Make a visit to a small restaurant when the vegetable man arrives. The owner goes to the cash register and pays him in cash. What makes us different? We generally just don’t ask for our money. It is as simple as that!
You have to keep a balance in your business between residential and commercial customers, or the pay at the time of service customers and the bill out accounts. Anytime your Accounts Receivable exceeds 30% of your sales, you are getting into trouble financially. What good is having great sales when you cannot make payroll or pay your bills in a timely manner. Remember, it is not about how much you sell. It is about how much you get to keep! Even on commercial accounts where you are providing service work, ask for payment at the time of service. Many times, the General Manager or Bookkeeper can give you a credit card and pay now. Or sometimes, they will just write a check. Do not assume they need to be billed by your company. Also, if the customer is quoted a price upfront, they have time to prepare a means of payment, while you do the work.
When the customer sets up the appointment, the CSR says “How will you be paying today?” When the technician quotes the price for the work to be performed, and gets an authorization signature, “How will you be paying today?” At completion of the job, we collect a completion signature and ask for that payment. This is not difficult. If you don’t ask, you will not receive! And, if a customer ever says they need to run an errand while you are there, collect before they leave. That is an old trick and you are smarter than that.
Dismiss that plumbing myth. You do not have to bill your customers. Ask for payment at the time of service just like every other retail business.
If you want to more from your plumbing business, give me a call today at 727.451.9160 or email me at KeithGlass@ThePlumbersCoach.com. There is no better time than right now to improve your business.
The Plumbers Coach™ Detailed personalized business coaching and training for plumbing contractors. Like us on Facebook @ThePlumbersCoach, follow us on Twitter @T_PlumbersCoach and LinkedIn @KeithGlass1.