Each year, I drop off on average three to four pairs of shoes to be repaired, instead of dumping and buying a new pair. It is usually significantly cheaper than buying a brand-new pair and will save time in trying to replace a favorite, yet discontinued, style. A couple of weeks ago, I walked into my local shoe repair shop. The owner greeted me and told me that it would be $10 to fix my son’s sneakers.
I said the price was okay, and was about to turn around to leave, but…
Surprisingly, he asked me to pay right then!
Normally in the past, he appreciated being paid in advance, but didn’t require it. He even has a sign on his counter that says, “Pre-payment of services is appreciated.”
As I handed him over my credit card, I noticed that he had a check and letter on his counter asking if anyone knew the person who wrote him this $35 check. He was trying to track down a customer who wrote him a bad check. The check bounced and he was stuck with paying the bank fees for returning the check. This is in addition to him losing money for his time and materials to fix the shoes and the profit he would have made. He knew it was too small of an amount to try to take the guy to court due to lawyer fees, so he accepted his loss but learned a valuable business lesson. (*Note – the address on the check was to a P.O. box that conveniently was closed and no longer in use by the time he tried tracking down the customer.)
Needless to say, he no longer accepts checks and requires everyone to pre-pay for his services.
He also shared with me that due to not requiring people to pay upfront in the past, he has a long line of shoes on his shelves that he has fixed, but customers have never returned to pick up. That’s another LOSS for him. He is unable to collect money for his time and materials to fix these shoes, and is losing valuable shelf space due to holding onto them. I asked him how many pairs of shoes that he estimated that he has fixed but was never paid. He replied back, “Over a hundred.” Wow. That’s a shame.
What can you learn from this simple, yet surprisingly not uncommon, story of my chat with this business owner?
5 Lessons Learned on Making Sure You Get Paid
- Don’t accept checks as a form of payment.
- (*Note – I’m not a fan of cash either due to IRS implications. If you don’t already know why, be sure to read, “Hassle In Paying By Cash or Check”)
- Require customers to pay upfront for services and goods.
- If requiring upfront payment seems too much, at least require a deposit, so they at least have some ‘skin in the game.’
- Implement a deadline.
- If you provide services, require that service requests/redemption must be completed by a certain date. Otherwise, you may have customers who try to come back a year later to collect on services paid, but you’ve moved on and no longer have capacity.
- If you have a product business, tell customers that you are not responsible for any goods that are not collected after a certain # of days. (*Note – most dry-cleaning businesses have a sign that says something similar to this.)
- Request multiple forms of contact methods. Make sure you have a customer’s phone number and email address in the event you need to reach them.
Implementing these five steps can make a huge difference in your business’ bottom line by allowing you to have sufficient funds to pay your own bills and payroll on-time, and enabling you to work on your business rather than chase down customers to pay.
I’m curious – have you experienced something similar in your business? Are you tired of having to chase down customers to get paid on-time? If so, leave a comment and tell me what’s going on and what methods you’ve tried to get paid.