DC Recap: IBS’s Guide To Getting That Cheddar

Quick, what’s the one thing shop owners can all agree on?

They like getting paid.

Seriously. Getting that dinero is pretty dang sweet. Except sometimes that money doesn’t flow into the coffers as easily as it should. People don’t settle up on time…or at all…and suddenly you’re in the red. 

It happens to a lot of shops. That’s why we discussed it at Diesel Connect.

Or rather, the guys from Interstate Billing Service discussed it.

(They also gave an impromptu concert, but that’s not really payment-related.) 

(Editor’s Note: But the concert was awesome!)

You may know the IBS crew from our integration with them. In short, if your customer has or is willing to get credit from IBS, then IBS pays you—they’re the ones who will deal with accounts receivable. 

It’s pretty neat, and after 40 years in the business, IBS knows a bit about payments and what to do when you need to chase one down. They sent Rusty Roberts, VP of Sales in the West, and Steve Williams, SVP of Sales, to share that information with DC attendees.

We’re embedding the video in this blog post so you can see their recommendations for yourself, but keep reading for a brief recap. 

WHY IS IT GETTING HARDER FOR SHOPS TO GET PAID?

Now, as we mentioned above, IBS has been dealing with payments for decades. They’ve seen market fluctuations, bank issues, and all the stuff that can cause problems for shop owners just trying to get paid for their work. This year’s big issue? Terms.

Payments usually take one of three forms for repair shops: cash/check, credit card at the time of service, or terms. In an ideal world, that’s a net-30 situation. Offering terms to customers, the IBS guys pointed out, essentially makes you a bank—after all, you’re bankrolling those customers. 

(Side note, only extend terms—aka credit— to the customers you really trust. If your customer doesn’t pay up, it’s your pockets that are emptied.) 

“We’re seeing a lot of people getting pushed to longer terms,” Steve said, noting that larger clients may be asking for “60, 75, even 90-day terms.” He thinks it’s a COVID leftover, something that began during the height of the pandemic that continues today because hey, some operations have realized dragging out terms is better for their bottom line.

This is not great news for a repair shop looking to grow, as you need capital to do that…and if your capital is all tied up in accounts receivable…well, that’s not actually money you can grow with, is it?

“That handcuffs you in growing your business,” Steve clarified.

A brief survey of the audience indicated most attendees did offer some sort of terms to customers. We suspect most repair shops run similarly. So to best protect your shop, you need to sort out when you should offer terms and who you’ll offer them to.

Rusty and Steve had a few suggestions. 

THE FIVE “Cs” OF CREDIT

Obviously, no one is clairvoyant and the final decision regarding who to extend credit to will be up to you. But the five things you can look into below may each offer up some bit of data that will help you decide whether you ought to extend terms—and what kind you should extend. 

• Character. Who exactly are you doing business with? If it’s a smaller organization, usually that’s the owner. You need to look at their creditworthiness…which can be tricky these days, as banks aren’t giving references the way they used to and not all shop owners are aware of the paid resources they can look into to gauge a customer’s creditworthiness.
• Capacity. What’s their debt compared to their income? That means looking at their financial statements. What other obligations do they have to pay off before they pay you?
• Capital. How much money do they have? “Do you ever call any competitors about particular customers to see what their experience has been?” Rusty asked. “I know that’s a little bit of a touchy thing … what about the manufacturers?”
• Collateral: “This is a unique one,” Rusty said, noting that collateral is more popular in the banking world than in the repair industry. Collateral is the stuff you can repo if a customer doesn’t pay you.
• Conditions: What’s your market like? What is influencing it? We hate to dig up COVID again, but it’s a good example of how an event (such as a pandemic) can change an industry virtually overnight. 

Seems like a lot of work? Maybe. But it’s well worth undertaking if you want to make sure you get the cheddar your work deserves. 

WATCH THE VIDEO FOR MORE ADVICE—AND SOME SERIOUS MUSICAL CHOPS

It goes without staying that IBS can do all that for you—you just get to enjoy the dough. We highly recommend watching the entire presentation, and not just because Rusty proved he is absolute fire on a harmonica.

Yes, folks, we had a musical number during Diesel Connect. Now, can he line dance?

We’ll have to find out next year…