How Do Your Customers Pay Their Bills?

[Somtham]

We've been selling catfish for about a year and a half now, and losing money I might add. The first couple of times the wholesaler would pay cash. Then he wanted 15 days credit and we said ok. Then he wanted 30 days credit and we said ok. My wife and I are way to soft and trusting. Now the guy is into us for over a 100K and is 4 months late so I asked the wife if she could find a new wholesaler.

We went and talked to a farmer in a neighboring province and he gave us a number. The wholesaler and his wife came and bought one ton of fish last Saturday. I told my wife they need to pay cash, "I don't trust Thais any more", and she said the person wanted until Monday to pay. I said "ok, you pay me today and you carry the credit until Monday". Well, after the buyer didn't show up roday, Monday, at 5:00 as promised she called her. "Oh. so sorry, way to busy today, I'll come on Wednesday."

My wife is so bummed out.

We had a great day today transfering and grading fry from one pond to 2 ponds. We (my wife, myself, and one of the workers) were in a wonderful mood but tonight my wife is so depressed because the vendor did not pay her today. I'm afraid I will end up working some more tonight...on top :-)

So, when all you folks are selling your fish, your veggies, your fruit, your rice....How do you receive payment?

How can I get her back on top? I'm tired!!

rgds

[ya5702]

We've been selling catfish for about a year and a half now, and losing money I might add. The first couple of times the wholesaler would pay cash. Then he wanted 15 days credit and we said ok. Then he wanted 30 days credit and we said ok. My wife and I are way to soft and trusting. Now the guy is into us for over a 100K and is 4 months late so I asked the wife if she could find a new wholesaler.

We went and talked to a farmer in a neighboring province and he gave us a number. The wholesaler and his wife came and bought one ton of fish last Saturday. I told my wife they need to pay cash, "I don't trust Thais any more", and she said the person wanted until Monday to pay. I said "ok, you pay me today and you carry the credit until Monday". Well, after the buyer didn't show up roday, Monday, at 5:00 as promised she called her. "Oh. so sorry, way to busy today, I'll come on Wednesday."

My wife is so bummed out.

We had a great day today transfering and grading fry from one pond to 2 ponds. We (my wife, myself, and one of the workers) were in a wonderful mood but tonight my wife is so depressed because the vendor did not pay her today. I'm afraid I will end up working some more tonight...on top :-)

So, when all you folks are selling your fish, your veggies, your fruit, your rice....How do you receive payment?

How can I get her back on top? I'm tired!!

rgds

How do your customers pay their bills?

Reluctantly!

(This is to cheer you up, I hope.).

[dsys]

We had a similar problem but not to such an extent. Now if somebody wants credit, no problems, just leave your id card and a couple of "baht" worth of gold as security.

How can you get back on top? Try and get your wife to involve the respective village heads.

Edited October 8, 2007 by dsys

[Tim207]

How can I get her back on top? I'm tired!!

rgds

Sorry to see your having a tough time. On the plus side, I think your wife will be on board with the no credit idea now.

As I see it, you are both too nice to refuse credit which implies you don't trust your customer even though you really don' trust them. What you need is a bad guy to blame it on. If you can take yourself out of the equasion either by not being around at the time or unable to communicate directly with the customer it will allow your wife to refuse credit using you as an excuse.

Sample discussion:

Customer: We can't pay until next week.

Wife: I have to have money before you take the fish or my husband will be very angry.

C: Don't worry I always pay when I say

W: I am sorry. I am sure you would pay but my husband will not allow me to give credit to ANYONE anymore. I can only sell to someone with cash

C: You don't trust me?

W: Of course I know you would pay but I am not allowed to let ANYONE take fish before they pay

And that can go on and on. The customer is up against a brick wall without you or your wife having to be confrontational.

This works great as whatever rationalization he uses on your wife she can just agree that she wishes she could help and she is sorry but those are your rules and she has no choice. As long as there is someone else who made the rules and that person can not be presented with all the reasonings why the customer should not be subject to THE RULES then there isn't any rationalization that they can make to get you to give credit.

If a regular customer needs credit get some collateral. If they don't have any or are reluctant to give it you shouldn't be giving them credit anyway.

Tim

[seppl04]

How can I get her back on top? I'm tired!!

rgds

Sorry to see your having a tough time. On the plus side, I think your wife will be on board with the no credit idea now.

As I see it, you are both too nice to refuse credit which implies you don't trust your customer even though you really don' trust them. What you need is a bad guy to blame it on. If you can take yourself out of the equasion either by not being around at the time or unable to communicate directly with the customer it will allow your wife to refuse credit using you as an excuse.

Sample discussion:

Customer: We can't pay until next week.

Wife: I have to have money before you take the fish or my husband will be very angry.

C: Don't worry I always pay when I say

W: I am sorry. I am sure you would pay but my husband will not allow me to give credit to ANYONE anymore. I can only sell to someone with cash

C: You don't trust me?

W: Of course I know you would pay but I am not allowed to let ANYONE take fish before they pay

And that can go on and on. The customer is up against a brick wall without you or your wife having to be confrontational.

This works great as whatever rationalization he uses on your wife she can just agree that she wishes she could help and she is sorry but those are your rules and she has no choice. As long as there is someone else who made the rules and that person can not be presented with all the reasonings why the customer should not be subject to THE RULES then there isn't any rationalization that they can make to get you to give credit.

If a regular customer needs credit get some collateral. If they don't have any or are reluctant to give it you shouldn't be giving them credit anyway.

Tim

Great Scenario Tim, but does it really work in Thai countryside ?

Or doesn't the wife eventually loose face, as cannot decide anything

am being told that especially in Isaan the women take care of the moneybusiness in the family (at least in rural villages)

Seppl

[Tim207]

Great Scenario Tim, but does it really work in Thai countryside ?

Or doesn't the wife eventually loose face, as cannot decide anything

am being told that especially in Isaan the women take care of the moneybusiness in the family (at least in rural villages)

Seppl

There is no face to be lost in obeying a husband as far as I can see. It is a wife's duty. Although women often control day to day finances the man is still (theoretically at least) the boss. Who makes the decisions behind closed doors is a completely different thing than the view that is projected in public. Obviously this is just a generality with thousands of variables but I don't think a wife would lose face for following a husband's wishes as opposed to a customer's. I actually see this as a way for everyone to keep face. The wife doesn't lose face by allowing a customer to brow beat her into a credit situation that her husband doesn't want (which is the current situation and a loss of face for her), and the customer doesn't feel that it is he personally that is being denied, credit is just not an option for anyone. I am not suggesting this is an option for everyone. Face can be very subjective. It is just an option to consider and perhaps suggest to the wife.

Tim

[Somtham]

Great Scenario Tim, but does it really work in Thai countryside ?

Or doesn't the wife eventually loose face, as cannot decide anything

am being told that especially in Isaan the women take care of the moneybusiness in the family (at least in rural villages)

Seppl

There is no face to be lost in obeying a husband as far as I can see. It is a wife's duty. Although women often control day to day finances the man is still (theoretically at least) the boss. Who makes the decisions behind closed doors is a completely different thing than the view that is projected in public. Obviously this is just a generality with thousands of variables but I don't think a wife would lose face for following a husband's wishes as opposed to a customer's. I actually see this as a way for everyone to keep face. The wife doesn't lose face by allowing a customer to brow beat her into a credit situation that her husband doesn't want (which is the current situation and a loss of face for her), and the customer doesn't feel that it is he personally that is being denied, credit is just not an option for anyone. I am not suggesting this is an option for everyone. Face can be very subjective. It is just an option to consider and perhaps suggest to the wife.

Tim

Well, Wednesday came and went and no paymnet as promised but this morning the buyer showed up at 7am and paid the bill.

Tim - Thanks for your suggestion. I ran your scenario past the wife and the wife said they will just go get fish somewhere else. She says, the wholesaler shoulod just pay the next day afetr she sells the fish. Anyway, it'll be another month before more fish are ready so will see what happens.

Chownah, Fruity, Lickey, Ozzydom, Pondlife, or ayone else have techniques to use?

Rgds

[chownah]

Somtham,

The amounts of money I have dealt with are very small and no one has had difficulty paying cash on delivery....I should be so lucky as to be so productive with vegetables as to have someone owing me so much money that I have a problem like yours!!

I think Tim207's approach is a good one and have used it for various other issues....seems like it might not be exactly what you need though given the way your wife describes the situation. I guess you could keep looking for a more reliable customer or start to develop another marketing plan altogether...maybe in a small way at first. I'm convinced that marketing is the key to success in agricultural enterprises. Difficulties in the production end can always be worked out and there are alot of resources available to help in diagnosing and fixing the problems that arise in producing a crop....selling it for a good price with the least effort seems to always be the problem.

Keep your mind open for new marketing ideas...be creative...try to think of a new angle. Your probably doing this already...so I guess just try to think of this as encouragement!

Maybe the next time your wholesaler comes to pay you you should ask if they can loan you some money and you will pay them back with fish?...or something like that....maybe not...

Chownah

[Tim207]

Well, Wednesday came and went and no paymnet as promised but this morning the buyer showed up at 7am and paid the bill.

Tim - Thanks for your suggestion. I ran your scenario past the wife and the wife said they will just go get fish somewhere else. She says, the wholesaler shoulod just pay the next day afetr she sells the fish. Anyway, it'll be another month before more fish are ready so will see what happens.

That is of course the problem with not giving credit. Your customers may go somewhere else. Only you can evaluate whether your product is in sufficient demand to get away with a no credit rule. Keep in mind that your credit losses can easily negate any profits you make on what you are paid for. Selling less fish may be more profitable than selling everything and not getting paid for it all.

If you have to be flexible with payment terms you still have to make sure people understand that they have to do what they say. When they don't pay on time something has to be said so that it is understood you expect payment when it is agreed upon. If you let it go because it was only a few days, the next time it will turn into a week and then weeks and eventually you will be the last one paid when there is extra money around. This isn't a Thai thing, this happens everywhere. And I would be willing to bet that is what happened to you. Also, if the bill keeps escalating there will come a point where people will see how much they owe and decide they can't afford to pay and they may even blame you for allowing the bill to get so high.

Let your wife decide the best Thai way to get the point of paying on time across to your customer. Let her use the "crazy farang customs card" if she wants.

Good luck

Tim

PS: Just thinking about people not paying on the agreed terms is annoying me. I have been dealing with giving people credit terms in one way or another for 20 years and have learned my lessons the hard way. The best thing you can do for both you and your customers is to keep a tight rein on the credit and avoid the common progression into unmanageble debt that I outlined above.

[solo siam]

give a discount for cash, say 5%.

[pete_r]

And penalties for late payment, if enforceable.

[Pond Life]

Is there any way you can cut these guys out & take the fish to market yourself ?

[ozzydom]

Your buyer is obviously a wholesaler and would be working on a mark-up to vendors who you can bet are paying cash as our market retailers do.

Dependant on the quantity they buy we give either 5 or 10 baht per kg discount for cash, if they want credit they pay retail price.

A very old principal in marketing is" Never give credit on perishables".

Unless you are using a proper ORDERING,DOCKETING AND INVOICING system complete with Terms of Trading and appropriate signatures, you dont have a leg to stand on if a sale goes pear shaped.

The profit margin is slim enough in growing fish so unless you get cash or at least prompt payment , you are better off leaving the fish in your ponds.

The fish you are selling are consumed within 24hours and your wholesaler and their retailers have the cash in their pockets in that time ,so should you or you are being used as a financier ..

The only time we give credit is to Monks feasts at the Temple or funerals and they buy at full retail (average 5k) and we always have payment as soon as the collections take place usually within 48 hours.

Having to "lean" on a buyer for payment can end with serious problems,especially when the amount owing is allowed to blow out, many "accidents" have occurred to wipe out debts far less than 100k..

[Tilapia]

Hi Somtham

Sorry to hear that, we spoke about it a few weeks back, and remember that you were concernd about it.

I have been in the same situation before, and still are (but only with pig-feed) What I did was to start my own market, be the producer and wholesale as well, that gets the middle-man out of the game, and you have the direct contact with the people who sell the fish at the market. They will of-cause ask for credit to, but it's more easy to control, we have our people at the market, collecting the money after closing-time, that was how I did with the cat-fish. Now I have changed to Tilapia, and I use more or less the same way, and it's seems to be working ok, I have dumped the price to get the others away, they cant handle a loss over a longer period, and since we are making our own feed, then we are still making money, so it depends how deep pockets our competition have.

Now, with the pig-feed, we have to play hard-ball, if people dont have money to pay cash, then they have to make a contract with us, so in case they dont pay, things just go the legal way, normally then find a way to pay, since they dont like to lose face i the court.

Regards

Tilapia.

[Tim207]

Now, with the pig-feed, we have to play hard-ball, if people dont have money to pay cash, then they have to make a contract with us, so in case they dont pay, things just go the legal way, normally then find a way to pay, since they dont like to lose face i the court.

Regards

Tilapia.

Have you ever had to go to court in Thailand? I am really curious how this works as I was under the impression that it takes forever to get something through a Thai court. I have had to do this many times in the US but never considered it a viable option in Thailand. After a judgement here I can then follow up with bank account seizures, property liens and wage garnishment. What do they do in Thailand to satisfy a judgement?

[torrenova]

I ran your scenario past the wife and the wife said they will just go get fish somewhere else. She says, the wholesaler shoulod just pay the next day afetr she sells the fish.

OK, so if he was going to get more fish from somewhere else this tell syou that he is paying you less, you have a higher quality product or he gains some advantage dealing with you. Of course, it could be that demand exceeds or matches supply when he will have to come to you.

Secondly, get your cash ASAP as he already has his.

Lastly, cut him out of the equasion. Take the fish to market yourself.

[Somtham]

Thanks all for your replies and suggestions. I definately screwed up letting the last wholesaler run his credit bill up to B240k+ without any official paperwork. He is slowly paying but that doesn't help us when we need to buy feed, cash, at around B100k/month. There's usually a reminder phone call to him once a month and we're not pushing more than that because as Dom says, "accidents do happen". Can't rememeber for sure who posted about the pond being poisened (maybe Lickey) and that is another scenario I don't wantto see happen if we get to pushy.

I have spent a lot of time talking to the retailers at the fresh market and offering a bit lower price than what they pay the wholesalers. It seems these people have been buying fish from the same wholesalers for 10+ years and they get the amount of fish they want everyday and won't take a risk of buying from somebody that is here today, gone tomorrow. We are not big enough to be able to supply large amounts of fish on a daily basis.

The new wholesaler, and the old one, definately have a reason to buy from us and that is their cost. We are one of only a few local farms. If they don't buy from us they need to travel to neighboring provinces to buy fish and haul back here for sale at the market. So it is to their advantage to buy our product when it is available.

From all your advice the plan of attack at this time will be to have the wife insist on COD and blame me. If credit is given it will be for a few days at most with a signed piece of paper. Typically when a pond is ready for harvest the wholesalers will buy a ton everyday or every other day until the pond is empty. Payment will need to be made for the last sale before taking out more fish.

Thanks again for your replies and if you have more input/ideas they are appreciated.

rgds

[Tilapia]

Now, with the pig-feed, we have to play hard-ball, if people dont have money to pay cash, then they have to make a contract with us, so in case they dont pay, things just go the legal way, normally then find a way to pay, since they dont like to lose face i the court.

Regards

Tilapia.

Have you ever had to go to court in Thailand? I am really curious how this works as I was under the impression that it takes forever to get something through a Thai court. I have had to do this many times in the US but never considered it a viable option in Thailand. After a judgement here I can then follow up with bank account seizures, property liens and wage garnishment. What do they do in Thailand to satisfy a judgement?

Hi Somtham.

A civil case takes about 4-6 month to get to the court, then there will be a settlement where the person have to pay X amount of money every month. But we have not been there yet as the common Thai, dont want to lose face, so after they get the letter about a law-suit, then they come up with a way to pay, at-least in my cases.

Regards

Tilapia.