Gordon Woolf's Blog

Make sure you get paid on time

Being successful in a small business is not just reliant on making a profit on whatever you sell, whether it is goods or services. It relies also, and perhaps more importantly on getting paid for those goods or services.

I was surprised yet again this month to come across a small business owner, in this case a freelance designer, who had not thought to set out clearly just when he expected to get paid and ensuring that was understood by his clients.

He wondered whether he should offer a discount for payment at 10 days or 30 days. That, I suggested, would just mean he would be giving a discount to his current prompt payers and encouraging others by suggesting he was prepared to finance their debts to the extent of 30 days which could be attractive compared to bank overdraft costs. He also needed to make sure that he got invoices out immediately a job was done, and certainly not wait until the end of the month (and sometimes into the next month) as he had been doing.

Long ago I established a simple system with my clients: no job would be started until the previous one had been paid for. I did have a couple of exceptions for weekly jobs but on those there was a date for payment each month which I had got from the client and no future job would be started if that date went past without payment.

When you have your own debts it may seem hard to seemingly pass up the chance of more work, but if you are offering fair value in what you do you will find that clients will keep to agreed terms when it is in their interest. Those who do not may not be worth working for; it is no good doing work for which you will never be paid, or paid so slowly that extra costs in chasing payment eat away at all the profit and do not return your own expenses in doing the job.

Part payment should be normal in advance on first orders. In my experience as a publisher, most book printers now work on half payment in advance and the rest before the finished job is despatched. One large printer told me recently that is what saved them in the recent global difficulties.

Faced with such payment terms from printers I can understand that some publishers will be trying to delay payments to other suppliers ... will you be one of those?

Magalog or catazine - good idea but not a new one

There's nothing new under the sun. That was my reaction when I read a US Postal Service blog suggesting the latest trend was the "Magalog" or the "Catazine", a hybrid of catalog and magazine. My reaction was thus because this is how one major category of magazines, the trade magazine or trade journal, started a couple of hundred years ago.

The Morgan brothers, who ran a business which combined the categories of druggists and hardware sellers, decided back then that they'd get more readers and more committed readers for their catalogs and thus more customers if they included news and information. And that meant news etc that was not just puffery for their products.

In the 1960s I worked in London for the firm of publishers which had been, a century earlier, that firm of chemists. Those catalogs became the world's first trade magazines, The Chemist and Druggist and The Ironmonger. As they became successful in their own right, they split from the chemicals company (which became Morgan Crucible) and the one which became Morgan Brothers Publishers (and subsequently the Morgan-Grampian Group, now part of Fleet Holdings).

When I started work for the descendants of the Morgan Brothers (Sir Charles Morgan Hudson was the chairman) I worked on The Ironmonger and they were approaching their centenary year as publishers. They set a high standard with an editorial staff of around ten on that magazine alone, a supplements department with two or three (I worked for that section for a while and wrote a 64-page guide to glues and adhesives - exciting stuff!) and an inquiry department with 5 people fulltime answering phone and mail questions from subscribers.

It was definitely profitable and as a young reporter I was sent UK-wide reporting on the meetings of hardware retailers and ironmongers. When John Betjeman (later appointed Poet Laureate by Queen Elizabeth II and following on previous appointees to that position such as Tennyson, Wordsworth and John Masefield) called for some information in order to write his speech to open an exhibition of Opercula (perhaps better known as "coal hole covers" those often ornate cast iron plates set in footpaths in front of houses above the coal cellars) I was told to find the booklet on that subject we had published long before, try to find some updated information and arrange to meet him before the event and then report on the opening. It took many hours and resulted in about a 6-inch story.

But that was the way things were in those profitable days. Maybe some of the "new" catalogues with news will do as well. As long as they follow the basic rule that the Morgan Brothers followed, that there must be no puffery. Readers had to be respected.

I'd suggest that a good start might be not to call the new publication a "Magalog" or the "Catazine".

The biggest nuisance: a customer

You’ve got a big event scheduled for the business, maybe a visiting dignitary to the town who has been cajoled into visiting your new premises, and, just as the car is scheduled to pull up in front, an ordinary customer arrives and wants to talk about a possible order. What do you do? It’s such an obviously likely event, at least in my mind, but it seems the possibility had not struck the minds of the local branch of a major service provider when my wife and myself drove into their car park recently. They just seemed not to know what to do. As their minds creaked, we become uncomfortable and decided we just wanted to leave -- which we did. Admittedly it was not your everyday purchase, but it was one we had been thinking about for a long time: prepaid funerals. The first place we called at, in the middle of a weekday afternoon, was deserted; not only deserted but with a heavy iron grill across the entrance. Inside we could see the office door and there was a notice stuck on it but we’d have needed considerably stronger lenses in our prescription spectacles to read it. Next place at least had signs of life with a single car out front and a tall thin man standing on the verandah. “We’d like to talk to someone about prepaid funerals,” I said. His mouth opened but it was a while before any words came out: “We’re about to conduct a funeral”. I waited for some suggestion. Three considerably better built men appeared in the doorway. I can’t be sure now but they seemed to be rubbing their hands together, though whether in the manner of Dickens’ Uriah Heap or of characters from a mobster movie I’m not sure. I definitely did not hear any knuckles crack. “Can we help you?” the leader said. I repeated our request. “He’d been told we’re about to conduct a funeral” said a voice behind (presumably the thin man) stating what was true, though that had been no more than two seconds earlier. I began to feel a retreat was necessary. I half heard a comment about the room they’d use being in use, which might have made sense to them, but by now we were heading for the car. In my haste to exit I forgot that to open all doors on our car you have to press the keypad twice, so as what was presumably the first attendees for the funeral arrived, I realised my wife was still holding the door handle. By the time I reacted the incoming car had parked and as we started to reverse I realized we had to wait for an elderly lady on a walking frame to  be helped across to the parlour. By now it all seemed to be in agonizingly slow motion but eventually we were on our way. I had learned my lesson. Unlike the funeral directors I used to know where, as a cub reporter I’d call in and be handed a coffee by the undertaker’s wife while I learned who had died and who would and would not appreciate being asked questions by the media, today’s deaths are initially planned entirely by phone. Should a would-be customer actually call in, it seemed you will not be welcome. Am I alone in feeling there should be some more personal service as a first contact? However, since then I’ve realised that an increasing number of service businesses expect the phone to ring, to the extent that the walk-in customer is not really wanted, and must at least stand aside and wait if the phone rings. Business owners in the service area in general might do well to stand in their own reception area and see just how the walk-in client is received. More info on dealing with customers in the book written jointly by Geoffrey Heard and myself: Success in Store