Talking trade: Robert Barnes offers basic business management advice for installers

An order is only an order when the customer has paid! But how can you make sure you ‘ll get your money?

Fighting the tailbacks on the ”Road to Hell” and every other part of the UK motorway network, is an inevitable down-side of meeting up with installers, and chewing the business cud.

This is not as sad a life as it might sound, because I have known some of these guys for years, and some I am meeting for the first time. And I learn from all of them in different ways.

There are those who will be successful in whatever they do, because they have the “spark”, and there are those who are successful in spite of themselves. If business success is defined in terms of profitability, cash-flow, quality of life, and happy customers, there are some shining examples out there. But one thing that they all have in common, is that, with minimal extra effort, (or equally importantly) re-directing existing effort, even greater success is tantalisingly close.

In the dim distant past, when I attended training courses with far greater frequency than now, life’s business truths were aired, and some of them have stayed close to my heart. One of these was “An order is only an order, when the customer has paid”.

It’s your money at stake

This is never more important, than when you are working for yourself … and “yourself” can mean literally that, or an installer with 40 staff.

In this and future articles on simple business management, I am going to shine the spotlight on the fine art of ensuring that your orders become orders as quickly as possible.

You probably wouldn’t be surprised by the number of installers who still pay merely lip-service to the vital importance of ensuring that they are paid promptly for the goods and services they spend their money and their resources providing.

It’s true, some customers use every trick in the book to hang on to their money! Well, chaps, you had the option to enter holy orders and escape this nasty commercial world, but as you didn’t, this is one nettle that you are going to have to grasp as tightly as possible.

Luxury of choice: You always have the luxury of choice of whom you do business with. Most people are honourable, decent and ethical in their business dealings. But however honourable people may seem to be, they may wish to take advantage, unless you make it absolutely clear what you want from the relationship.

Payment is due upon installation: Make sure that your payment terms are crystal clear, and understood by the customer, at the time that you go through the quote with him, AND when he gives you his Purchase Order, AND when you write back to him confirming his order. Then, there are no excuses.

You haven’t the time or inclination for all this paperwork?

Another favourite adage is “There’s never time to do it properly, but always time to do it again.” You can largely standardise all quotes and letters, and set them up in your word-processor/admin system, which you can print at the press of the proverbial button. Don’t think that all such documents would be impersonal, because they wouldn’t be. They would seem to the customer that they have been hand-crafted, just for him.

‘Your engineer could always plead that he won’t get his salary cheque if he doesn’t bring the payment back’

You might think that businesses won’t pay upon installation, because they need to process an invoice, before they raise a cheque. Send them the invoice in advance if they say that. More often than not, it’s a smoke-screen.

Credit will erode your margins

Ensure that payment will be ready for you before you set out to start the installation. No-one should be offended by your request, as you have taken the trouble to agree terms beforehand. Opening credit accounts for your customers can only erode your margins, and beware anyone who will only give you the business if they can have credit terms!

I realise that it could be more difficult collecting payment for callouts but, once again, you have agreed payment terms with the customer, so there should be no surprises. Once again, in most cases, you can re-confirm that a cheque is required, at the time the call is booked.

Educate your engineers: The engineer is merely acting as a go-between at this point, as all he has to say is that ”Mr Grimshaw says that you have a cheque to give me.” Now it takes a hard-hearted man to refuse a hard-working engineer who has been outside in the rain, putting up a new bell-box. If that fails, your well-trained engineer could always plead that he won’t get his salary cheque, if he doesn’t bring the payment back!

“I never prepare an invoice in advance … because the customer might want something else when we go to install”. Fine! Encourage him to have something else, but he must still pay for what he has contracted to pay, when you install. If he doesn’t want to write out two cheques (or you don’t want the hassle of chasing the additional amount), make sure that the engineer contacts the office, so that he can tell the customer how much extra he has to pay, and write this out on the installation paperwork, so that your additional invoice will tally with this – and gladly accept his one cheque.

All of the above presumes that you have the ability to install and commission a system correctly first time - I feel a topic for a future article coming on!

When all is said and done, it’s YOUR responsibility to make sure it happens. So if the process fails, there’s only one person to take the rap.

Happy customers come back

Both you and your customer benefit from a solid, professional relationship. He knows that he is being looked after, and will tell his friends or business contacts this, just as he will make it known if he isn’t being looked after. Happy customers come back for more. There is less pressure on your margins when they do, because they value you. They already know your payment terms, and so you both know where you stand.

Payment terms are important, but you have to back up your stance on this by ensuring that you also strike appropriate payment terms with your suppliers. There is usually room for negotiation, whether based upon price or credit terms, so make the most of the opportunity, and you will find that marginal deal, may have some lasting appeal after all.

I regularly hear the stories about installers who install for no profit, just to get the ongoing maintenance revenue. Unless you’ve got a secret game-plan, this inevitably is not a recipe for running a lasting business of good repute.