Welcome to the Promo Playbook, the podcast where
suppliers come to win in the promotional products
industry. We're your hosts, Lisa Faustek and
Adrienne Barker, bringing you insider insights,
expert strategies, and no fluff advice to help
suppliers navigate the promo channel like pros.
From marketing to distributors to mastering software
onboarding, we cover it all. Whether you're new
to the industry or ready to scale up, this is
your playbook for success. Let's get started.
Well, welcome everybody to the next episode of
the promo playbook. Today we're going to dive
into a foundational topic that sort of gets pushed
to the side. And I love that Adrian on our team
is very dialed into the finance and credit part
of running a supplier. So today we're going to
dive into. Setting up new accounts, making sure
that you have a credit protocol in place. What
is your standard operating procedure for onboarding
new customers and extending credit, making sure
things get billed and then you get paid. So I'm
going to sort of set the stage here and run through
a little checklist of some of the tasks that
need to go along with this. And then we'll dive
in with our team of experts on how to unpack
this topic. So how do you set up a new account?
How do you communicate that to your prospects,
your distributor prospects? How do you run a
credit check? What are the resources that you
need to see if this is a legit distributor? What
type of payment offerings do you want to have?
Do you want to have a payment portal? Do you
want to take credit cards? Are you only going
to accept checks? Do you accept ACH payments?
How do you collect the correct documentation?
Do you need a W -9 tax ID number? What type of
form do you need to create to have your distributors
fill out? We'll dive into credit card fees. How
do they affect your profitability? And do you
want to accept credit cards? So those are some
of the topics we're going to cover and also the
benefits of a variety of clients in your portfolio.
So Adrienne, I'm going to throw the ball to you
first because I know that this is a topic that's
dear to your heart. So you've worked with some
baby suppliers, some new suppliers. Talk us through
that process with them. So my first suggestion
is to stick with the industry software. I would
not say, oh, let me use Shopify or use another
program. Stick with the industry software. That
will help you to make sure that everything that
you're doing is under an SOP or standard operating
procedure and everything that you need will be
there. So first of all, my dad always said, there's
no business without having an account set up
first. You have to have the account set up and
then you got to get quotes going on, right? So
all of that, you have to make sure you have that
process correctly. So that's the first thing
I'd say is go to ASI. go to PPAI, see there's
other, there's the other industry directed software
that will help you to, to look at taking the
orders and looking at credit checks and giving,
and also, you know, what are these other distributors
have done? Are you going to take in a distributor
that has our zero rating? So you got to take
the time to research. And I want to say, you
want to make sure too, when you're talking as
a supplier to the distributors and getting them
set up, One of my favorite books is Unreasonable
Hospitality. You got to think in a way as a distributor.
They're busy, they're trying to take orders,
they're doing you a favor in their mind that
I'm giving you this order. You have to make it
easy for them to have an account procedure, easy
to set up, easy for them to make payments, and
that discussion of credit card fees needs to
be discussed. I'm going to throw it now to Kim,
catch the ball. Oh, I got it. Yeah, I agree.
I mean, I think it's often forgotten, like, hey,
here's the order. Great. It's so easy to open
your spreadsheet, your NetSuite, whatever platform
you're on, and put in distributor A, want 600
of these with a one -color imprint, send, and
off you go. And you don't really think about
that next step of, well, OK, that was a $6 ,000
order. When am I gonna get paid on that? How
am I gonna get paid on that? Like all the things,
right? We're all in this to make money. And the
only way you make money is by collecting your
payment. So having even just simple forms, if
you're not set up where it's completely automated,
being able to create templates, you know, onboarding,
supplier onboard templates, basic information,
name, address, contact person, who is the AR
person? the accounting person when you're generally
dealing with an order taker back and forth. But
if you don't get paid, that person doesn't really
know either. So you need to make sure you're
getting even just the basics that it sounds silly.
But I think sometimes, you know, we all get caught
up in the sale that we forget about those details
and to go back and have to redo everything or
backtrack it isn't so easy. So I think being
able to look at getting simple onboarding forms
to collect information is a great start. So you
have an account. And then the second step, you
know, to Lisa's point is okay, but how do you
want to get paid, right? What does that look
like? Is it credit card? Is it ACH? Are you,
can you take ACH? Do you even know what ACH is?
You know? So I think that it's often, yeah, we
jump to the sale and we forget the rest. Awesome.
Awesome. So great insight, you guys. So step
one, create a form for yourself. Make sure that
you have something you can email to that distributor
where you can get, and I want to support Tim's
comment of the AR person is not always the salesperson.
Most of the time, it's not unless you're dealing
with the sole proprietor distributor than it
will be. But most of the time, You want to capture
the accounts receivable information, email, all
that, as well as the person who's placing the
order. Key pieces of information also on that
form is tax ID number or resale certificate resale
number, those types of information. So step two
that Adrienne mentioned is check that in your
industry software. That could be Sage or ASI,
both. groups have software where you can check
the financial life of a distributor and make
sure they're in good standing. You know, that's
the best way to go about it. And then once you
have that back, you can determine what type of
terms you want to extend. So let's break down
terms. Adrienne, what types of terms can we offer
to our distributor friends? So distributor friends,
we love you all. Just pay in advance. Pay in
advance, but get as much juice as you can out
of it. So if you're paying in advance, that's
where you can negotiate and ask for an additional
5 % or 10 % off, right? You know, this is a tough
industry. So I just want to say to the suppliers,
you know, you have to know that there may be
a distributor out there that has an order for
you that's literally working out of their, you
know, closet. And does it have any money or does
it have a big company behind them? So you got
to do this because otherwise you won't get paid
for your work. And that's like the worst thing
that can happen is now you're going and trying
to go into collections. We're not, you know,
the health department. It's hard to put out collections.
That's probably the toughest part of the industry
and probably another conversation, which I really
don't know much about. So you've got pay in advance.
You've got you got. deals that you can make.
So you've got a term. So maybe you say, Hey,
I want to pay you in nine days. Can I get net
10? And that means that you're getting a deal,
but now you've got 10 days to pay when that invoice
is net 10. It could be invoice is due. And so
when you receive the invoice, that's when you're
going to pay. That doesn't mean that you're paying
in advance. It's when you receive the invoice
and suppliers talking about sending out invoices,
be prompt with it. because that is really a big
complaint from distributors that you wait to
invoice them. And then, well, they should be
happy that I'm not sending them an invoice. Okay,
no, because they can't invoice their client because
they wanna know if they've missed any charges
or if there's any overages or underages. So like,
seriously, you gotta make sure. Then you would
have your net 30, which could also differ, and
Kim's gonna share about that. But net 30 would
mean that you have 30 days to pay that invoice
afterwards. And anything over, if you are a supplier,
you may want to tack on interest rates. So you
may want to say, oh, you know what, if you don't
start paying. By the way, you may want to say
net 10, 2%. I think that is that it. So if you
pay within 10 days. You get 2 % off or 5 % off.
That's something you could do, especially as
a supplier and you're new and you want to be
flexible. That's a nice way to do it. And, and
other than that, you're going to have suppliers,
distributors that are going to say net 60, net
90, maybe. And of course, I think there should
always be open room for negotiations, but I don't
think that I've missed anything. So let me go
to have, let me mute up and you guys take over.
Okay, yeah, I don't think I don't think you miss
anything on that but I love the point of your
invoice out on time like that is just it's crazy
to me that you can place an order it can ship
and It takes two or three weeks for somebody
to get an invoice Like that's insane and it doesn't
make sense for you as a supplier because your
terms Don't start until they get the invoice.
So if you waited two or three weeks to send it,
you just lost two to three weeks of getting paid.
Like, we want it from a cash flow perspective,
right? You want money coming in constantly because
money's going out too. So I absolutely love that,
Adrienne. Make sure you get your invoices out
on time. Great. And then when you talk about
terms, you know, There are a couple different
ways, and we were talking, prepping for this
podcast, and I think all of us have experienced
different ways on terms. So net 30 tends to be,
I think, the typical timeline. You do have net
60. You do have net 90. Negotiate those. Nobody
wants net 90. That's like a whole lifetime went
by before you're getting paid. But you can negotiate
that. Of course, people are going to start there,
but that's not where you're going to land. But
then when you're talking about terms, you also
have to think about, okay, I'm giving somebody
30 days, net 30. How do you want that money to
come in? Can they pay it via credit card? In
that on day 29, pick up the phone and call in
with a credit card. Do they have to send a check?
Can they wire it, ACH? You have to figure out
how do you want to be paid? For us, you know,
how sort of we live at Quirksicle, you can pay
via credit card, but that has to get done at
the time of the order. And then net 30 is either
ACH or check. So, you know, for us, we don't
pass along credit card fees. So if we're already
sort of delaying payment for 30 days to allow
you 30 days, we don't also want to. have to suck
up credit card charges. So, you know, and again,
it's not hard and fast, but the majority, it's
either credit card and that card is charged at
the time of shipment, not in advance of the order,
but the time it ships. So basically balance due,
you know, upon shipping or it's net 30 and then
you can pay another, you know, a different way
other than credit card. But as we learned, not
everybody does that. Yeah, so it's all over the
place. It's a variety and smaller suppliers with
limited bandwidth might come at this from a different
perspective. I think the important part for any
supplier, no matter what size you are, is if
you can't have your own accounting person or
team invest in and outsource accounting. that
can help you stay on track with this. APAR is
super important for your cash flow, especially
when you're buying supplies and paying labor
and, you know, payroll and all those great things
we know as suppliers that are so important to
making the company run. So some key decisions.
Are you accepting credit cards? How do you charge
those fees? Will you charge those fees? Will
you offer a discount on early payment? Will you
have a payment portal? Things like that are important.
Will you set up on Shopify so that everything
comes through a tech stack and you're getting
paid upfront? Lots of things to consider. But
most important, get your data set up correctly
from the beginning. Make sure you know who your
customer is, who's going to pay, how you're going
to invoice them, and how you're going to get
paid. So I think we wanted to keep this sort
of a short, tight segment, one of our mini bites.
How are we doing on time, Adrienne? We're doing
great. And all is good. All is good. I was thinking
of something, but I need another minute to have
it go back in my head. OK. So I think what we'll
do is we'll end this segment here, because this
could be a longer segment maybe we'll have a
guest CFO join us and really talk about from
the supplier perspective how all of these things
come into play. Do you want to offer those invoice
discounts? Something that Adrienne said as we
were prepping for this call which I think is
important that I'd like to close with is You
want a variety of clients, a variety of distributor
sizes. You want some smaller distributors, you
might want some midsize distributors, and then
you might want to have a national or two, depending
on the size of your supplier organization. So
that way you have a good cash flow, good steady
cash flow of day -to -day money coming into the
business. When you're setting up your accounts,
distributors can range from small distributors
of 250 ,000 maybe annually all the way up to
multi -million dollar distributors and then our
nationals and things like that, which we've mentioned
before. So just good fiscal responsibility is
what we want to leave you with. Even though we
know as a small supplier, that can be really
difficult. Don't put it on the back burner. Don't
ignore it. Dial into it and set your supplier
journey off on a good, strong financial footing.
So thanks, everybody. We're going to wrap this
one up and we'll see you next time. Thanks for
tuning into the promo playbook. If you found
value in today's episode, be sure to subscribe
and leave us a review. Got a topic you'd love
us to cover? Connect with us on LinkedIn. We
want to hear from you. Until next time, stay
smart, stay strategic, and keep growing your
supplier success.