Start selling and stop ‘collecting’

Home Columns Al's Column Start selling and stop 'collecting'

By Ted Gregerson Collecting money should be fun for specialty retailers. Instead, it is absolute drudgery. You probably spend hours doing it every day. You call the customer, but no answer. You go to their home—no one is there. It goes on for weeks. Once you do reach them, guess what? They suddenly have a complaint about the job and want to negotiate the balance due.

Years ago, I was talking to a retailer I highly respect and mentioned our long list of ever-increasing accounts receivables and the challenges of collecting money. He told me, “Stop collecting money. Get it all at the point of sale.” I said, “That’s impossible.”

Years later, because of that conversation, our company no longer spends hours every day trying to collect money. Our accounts receivables are relatively nonexistent, even though our sales have almost doubled since then.

You are no doubt thinking, as I was back then, “That’s impossible!”

Believe it or not, it is as simple as learning to say, “Is that going to be check, cash or credit card?” at the point of sale. If you can say that confidently, without hesitation, most customers will simply pull out their method of payment and pay the entire amount right there on the spot. Then, guess what? No more spending hours every day performing the never-ending drudgery of trying to collect money after installations are completed.

Some customers will ask, “Do I need to pay all of it now?” When we reply with a simple, “Yes,” most will then proceed to pay the entire amount at that point.

Will you have some who refuse to do so? Yes. We ask those customers what their concern is with paying the entire amount up front. Inevitably, they say they are afraid we will not show up to do the work. For those customers, we agree to have them pay half at the point of sale and the other half once the installer shows up at the jobsite with the materials. Most of them happily agree to that. The key in that situation, though, is to collect the balance due before the installer starts the installation.

What if a customer absolutely refuses to pay the entire amount until after the installation is fully completed? They usually say it is because they do not know us and, therefore, do not trust us. We explain we have been in business for 25 years, have a retail store they can walk into any time and we guarantee our work. We also let them know they can use our finance program, where we do not receive the money until the work is completed to their satisfaction. If they charge it to their credit card, the credit card company will ensure they get their money back if they are not satisfied. If they still refuse, red flags go up immediately. Those are usually the customers that will give us a problem in the end, and we are better off not having the sale.

There are numerous benefits of operating this way. Our cash flow has increased; we have fewer customer complaints; we no longer have receivables that go uncollected; we have a lot more time during the day to do other things; and our salespeople are happier. Our biggest fear was that we would lose sales. However, our sales have nearly doubled since we implemented this change. It is almost like customers feel we are even more credible now.

Do yourself a favor. Stop collecting money. Just get it up front.


Ted Gregerson is the owner of two retail floor covering stores based in Anniston, Ala., Ted’s Abbey Carpet & Floor and Floors To Go of Anniston. He has spent his entire career in floor covering.

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August 16, 2021

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