A Sale Isn't a Sale Until You Get Paid
By: T.J. Tedesco
For: High Volume Printing
Published: December, 2000

Today, we’re going to get personal. My hardest day as a print sales representative occurred a decade ago. Not only had I put my friends in production through the jobs from hell, my new client declared bankruptcy shortly after receiving the second of two $15,000 projects – neither of which had been paid for.

After an unpleasant meeting with my president, CFO and sales manager, everyone agreed we were in a mutually blameless situation. Prior to the accepting the first job with the soon-to-be deadbeat, I followed company protocol and got a credit application filled out. Our finance department did the appropriate due diligence. Although this new customer had a history of slowish bill payment, there weren’t any obvious indications that they were soon going belly up.

The deadbeat – a fifteen-person design agency – had all the trappings of success: A fashionable address two blocks from the White House; a prestigious client list including well known New York clothing designers; and, an impeccably dressed charismatic leader in his mid-fifties. They were difficult to print for, but my company was up to the task. During press checks, we passed their litmus test: Matching color to fabric swatches without sacrificing flesh tone warmth. I thought I had a top-ten client … and so did my sales manager. Then, the credit problems surfaced. Deep down I knew I wasn’t blameless. Although I escaped with my job intact, I had hurt the team and felt awful.

Too Eager, Too Blind
First, success came too easily. I cold-called this company and won my first job within a week. During my first meeting with their production manager, I was introduced to both their creative director and president. They told me how difficult they were to print for and how hard it is to find printers with high enough quality standards. They knew I was proud of my employer and played me like a fiddle. They told me to come back a few days later because they might have an opportunity for me. With spring in my step, I did just that. During my next visit, they let me bid on a project, and I won it that same afternoon.

The next week, I made another mistake. I accepted a second job, before the first one had even gone to press. Again, it came too easily. We printed both jobs and waited for the check to arrive. And waited. And waited. They wanted me to print a third one, but I wasn’t about to do that until I got paid first. Thirty days turned into forty-five. My phone calls went unreturned. Finally, I barged into the place and then learned that they were closing shop. Since they were going out of business and their president was declaring personal bankruptcy, we were facing a total loss.

At this sour point, nothing short of cement shoes could possibly work. Many years have passed since this frightful episode, and although it still smarts, at least I learned enough to prevent history from repeating itself. My attitude toward credit and collections permanently changed. I now know that this important function shouldn’t be left solely in the realm of a credit or finance department. Who knows more about a client – the sales representative or someone sitting behind a desk reviewing credit applications? Regardless of which department absorbs the financial hit for the problem (a separate issue), responsibility should be shared. Yes, many sales representatives think it’s difficult to turn down jobs or collect money upfront, but when questionable credit is in play, they must. If a prospective company looks and smells rotten, it probably is.

Sales representatives heed this warning: You are accountable. Look for the ten warning signs of the deadbeat:

1. If it looks too good to be true, it probably is.
2. If it came too easily, it did for a reason.
3. If a lot of organizational “restructuring” recently occurred, be careful.
4. If the buyer won’t say who is currently doing their printing, probe more deeply.
5. If an established company only has new print vendors, beware.
6. If you do a job and all of a sudden the floodgates of opportunity open without receiving payment, don’t be a fool.
7. If the buyer isn’t concerned at all about price, en guarde.
8. If the buyer is too concerned about price, en guarde, part II
9. If the buyer signs the purchase order in this format “John Doe for XYZ Company” (reducing personal liability), ask why they did this, double check their credit and get them to sign a new PO.
10. Check every new customer’s credit, regardless of industry prominence.

If You Take A Risk
When you accept a client with questionable credit, minimize your exposure to bad debt risk by taking these actions:

1. Get a credit application filled out and ask your company to check them out particularly well.
2. If their application is approved, clearly point out your credit terms in writing (i.e., back of an estimate form). Ask if they anticipate having a problem with terms compliance. Good print buyers know that this is an important issue and won’t be offended. Poor payers will be offended, but who cares? Having the buyer initial acceptance of your credit terms isn’t a bad idea either.
3. Start keeping a log of your discussions with the customer.
4. As soon as you ship the job, make sure you send the invoice.
5. Five days later, ask how they liked the job and record their answer. Then, ask when they expect to cut the check.
6. Five to ten days before you expect the check to arrive, make another sales call. Again, mention your expectations of receiving payment for work already done.
7. Three days after the expected date of payment has come and gone, ask where the check is. If the check isn’t in the mail, secure a date when it will be cut.
8. If more than 15 days go by without payment, get tough sooner than later. At this point, be careful of clients inventing production problems as smokescreens for non-payment. If you have properly documented their satisfaction with your company’s performance, they have no leg to stand upon. Get your accounts receivable department involved. They have a range of actions they can take and will appreciate advance notice.

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You meet your business obligations; so should your customers. Having some slow-pay customers is OK as long as agreements are made upfront and upheld. You might have to adjust your prices, but you won’t be alone. Rest assured that your smart competitors have figured out the game too and won’t accept slow payment without adequate compensation.

T.J. Tedesco is a “hands-on” marketing, sales, coaching and training consultant to the post press industry. He is the author of Binding, Finishing & Mailing: The Final Word, and Win Top-of-Mind Positioning, both published by GATFPress and available at Amazon.com. T.J. can be reached at (301) 294-9900 or tj@growsales.com.