11.06.2017 | Posted by Jasmine

Apparel Collections 101: Collecting from Smaller Retailers and ‘Mom and Pop’ Boutiques

In Part 1 of our last blog (apparel-collections-101-collecting-big-box-retail) we discussed the importance of a steady cash flow and the different approach needed when collecting payment from larger, big-box retailers.

We learned that understanding how large retailers process payments and tailoring your AR approach to fit them can be a vital part of managing your receivables and improving cash flow. Today we’ll cover methods for handling smaller retailers.

Smaller retailers and ‘mom and pop’ boutiques bring their own set of benefits and challenges. They can offer a clear and direct relationship, usually you will have access to owners and top management. They tend to be familiar with their customers, including when, what and how much they buy of specific products at any time. Often they will work on “handshake” type of agreements and will usually offer better margins for your company.

On the other hand, small retail stores can often be uncreditworthy and lack the organizational processes and cash flow to get invoices paid in a quick and efficient manner. The business will often perform at the whim of the owner, if they are out, invoices don’t get paid.  They are also much more susceptible to the negative aspects of seasonality, weather issues, growing online sales presence and changes in industry trends.

Below are some tips on collecting from boutique retailers:

Make sure your customers are credit worthy and have them fill out a credit application. Can’t stress this enough! Get the names and contact info for owners and important management personnel that you can contact if payment issues arise in the future.  (Call or email us for a copy of the credit application we recommend)

Agree to payment terms and ensure both parties are sticking to them. Also, if you have been working with a company that is no longer credit worthy don’t be afraid to re-evaluate and change terms as needed!

Ensure customer is receiving a copy of the invoice before the due date! Check with your customer to find out the best way to get an invoice to them, and do it. Invoices are often sent with the shipped merchandise and get lost in the shuffle when the merchandise is received. If the invoice doesn’t make it to the A/P person or bookkeeper, the invoice won’t get paid.

Does the invoice have all of the required info? P.O. number? Correct pricing and quantity? Shipping/tracking information? etc. If an adjustment needs to be made on the invoice do so in a quick and timely manner eliminating any excuse or further delay on payment!

Reach out as soon as invoice is due and be diligent in your follow up! Mom and Pop shops don’t always have the resources to follow up on issues such as sizing/returns, missing product, etc., so make sure you do! Typically if you can handle disputes early on there shouldn’t be too much of a delay in payment.

Often mom and pop shops have a dedicated bookkeeper in on certain dates/times or perhaps even at a satellite office. Make sure you find out when the best time to reach the bookkeeper is and what the best phone number or email address to reach them is. Remember though that if the bookkeeper isn’t responsive don’t be afraid to reach out to the owner and make sure they are aware of the past due invoices!

Offer multiple forms of payment. Customers can state that they are out of checks or state that a check was sent in the mail only to follow up a couple of weeks later to be told the check was “lost in the mail.” By offering to accept a credit card or alternative form of payment you may be able to get payment sooner and prevent any further excuses for non-payment.

Be ready to work with the customer on a payment plan. The earlier you start following up for payment the quicker you should know if there is an issue of not being able to pay on time. In that case, offer a weekly or bi-weekly payment plan so that the debt can start getting chipped away early on.

Small boutiques may not have the resources to be fully staffed so they can’t speak with you while they are on the floor. Offer to email the information or fax the invoice over. Once they have the invoice you can let them know you will give them a few days to process the invoice and schedule a follow up call time when they are available. Always follow up when you say you will to show your customer you are serious about being paid.

Lastly, just like with big-box retailers, don’t be afraid to be the squeaky wheel! If the customer knows that you will keep calling they are more likely to put you on top of the pile for payment once cash flow comes in.

At Axim, we like to help our clients create a culture of prompt payments.  If you show your customers you expect payments to be on time, they will do so.  But it falls on you.  If you don’t ship product on time, follow up for payments when you say you will, resolve disputes timely, provide invoices to the customer’s desired location in the manner that suits them best, you’re not doing your part.

Do your part, expect your customer to do theirs, and you’ll create a symbiotic relationship built on mutual trust. Then the money will come.

We hope these tips were helpful. Questions? We would love to hear from you and help! Please visit us at www.aximinc.com for our contact info!