Newcustomers: financial assets or liabilities?

By I'rank M. Butrick Akron, Ohio

lFUSTONIERS are the life blood lf of every building-material dealer's business. You cannot exist without them and you cannot grow without adding new ones.

But the new customer is a comPlete unknown. Whether he comes in "over the transom" from Your yellow-page advertising, or direct mail, or referral lrom an existing customeror whether You have spent five years off and on trying to sell him, he is still an unknown.

How does he pay his bills? This is one thing you need to find out. Since you are not in the banking business, your job is to provide him with supplies and materialnot operating capital or short-term loans. To avoid unpleasant surprises, start out on the right foot. Money is a part of every business transaction and probably the greatest source of misunderstanding, anger, and lost customers. Find out exactly how and when he wants to be billed, and when he pays.

Frenk Butrick is qn aulhor, convention speuker und a busincss o$ner. He is president of Butrick Enterprises, Inc.-an acquisition consulting and brokerage finn-and managing dir' ector of the Independent Business Institute-a publishing firm-both in Akron, Ohio.

Whether you work with an individual subcontractor, or a corporate maintenance department or a major contractor, most businesses either pay a bill when it is 30 days old (or on the following Friday or Saturday, or lfth and 25th, or some such "we start to move when it becomes due" system) or they pay on some similar system the following month (March bills are paid the 25th of April, etc.). Not infrequently, larger firms will pay the month following the due date (a bill dated April 20th is due May 2fth so they pay June 25th, etc.).

You are not going to change Your customer's pay habits unless you offer a fat discount for a shorter Period, such as 390 for ten days (which will

Story at a Glance

Ways to learn financial habits ol new customers. .various credit checks...PaYment schedules. .tips for avoiding poor pays.

probably turn out to be three weeks anyway). Financial managers are constantly trying to speed up receivables without a large cash discount. We have even seen invoices stamPed "Due Upon Receipt." But unless you are the local utility company, it is a waste of rubber-stamP ink.

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