Thermal spray accounts receivables

Sponsored Links

The thermal spray coatings industry gets more and more competitive everyday with more new thermal spray coatings players getting in on the game every year and the existing thermal spray companies getting more and more aggressive in their sales and marketing efforts to garner more and more of the thermal spray contracts that are out there. The result is a scrambling around of the thermal spray business owners to get more orders and an ever increasing number of places that users of thermal spray coatings can go to get their parts coated. This has resulted in the thermal spray coatings industry becoming a buyers market for quite some time now, wherein the customer has many choices of vendors.

This has resulted in tremendous pressure being put on the sales and marketing teams of many thermal spray coatings outfits. To accomplish their goals, naturally the thermal spray salesmen seem to do everything possible from cutting down prices to promising shorter deliveries to improving quality and so on. Essentially, they are willing to do anything to win orders for their companies. And there is nothing wrong with this level of enthusiasm and willingness to give the customer what they want.

But associated with this, I have noticed an alarming trend from a business standpoint that is beginning to cause concern. And that deals with accounts receivables in thermal spray businesses. It has been standard practice in the thermal spray industry and for that matter in most manufacturing and surface finishing industries to extend credit for thirty days. But customers cannot take forty five or sixty or ninety days to pay their invoices. There have been some stray instances of people regularly taking one hundred and twenty days to pay. This will end up causing significant cash flow problems if not addressed immediately.

And if several customers start taking their own sweet time in paying you for the thermalspray services that you have provided, but you in turn are asked to pay your suppliers within thirty days, you end up acting like a bank and unless you are in the banking business, you are carrying the cost of this extended credit. And then to add fuel to the fire, you may end up hiring people to chase these late paying customers and that is added burden to your payroll costs.

There is only one way to solve this problem. You need to be firm with your customers regarding your accounts receivables. They NEED to pay in thirty days or they can take their business elsewhere. The first step in invoking this is to write a one page accounts receivable policy of your company and then mail it to all of your customers. Have them sign it and send it back to you. This policy must be given also to all new customers. Secondly, an abridged one short paragraph version of this policy must be included in all of your invoices. Thirdly, the first time that someone is late on payment by one day, you must send the violator of your policy at least a friendly e-mail reminder of your policy and a request to pay up their past due accounts.

But these three steps alone will not be sufficient. It is imperative that you pass on the burden of collecting the money to the salesman assigned to the specific account. That will show the salesman not to promise the world to a customer who does not care about your lunch. After all without accounts being paid, no one in your thermal spray shop eats!