"They do require that you take a few additional steps here and there, but overall they have a high probability for success and will certainly add to your company’s bottom line."
By Jared Smith
Make sure your customer knows that this is a fleet price and that if vehicles get cancelled, the “per-unit price” on each vehicle will go up. We negotiate how long the clients have to place the orders. A good rule of thumb is to reconcile the contract on a quarterly or semi-annual basis. Always keep in mind that a major portion of the discount offered for high quantities is in exchange for the efficiencies you gain as the shop owner by being able to produce the materials all at once. So, if a customer gives you one vehicle a month for a year you could miss out on that advantage, unless you can still produce them all at once and just install as needed. We have encountered customers who get a price on 30 vehicles and instead send us 15, expecting the same pricing. That doesn’t fly in our shop. Make sure contracts and pricing are based on quantity and if that quantity goes down the price goes up.
To provide a financial safety net for your company when dealing with small fleets, write up very specific terms that address all possible problems that may arise. If your client commits to 30 vehicles but has only brought you nine vehicles by the end of a year, you’re going to wish you had put in better terms. Always mind their total awarded credit limit – a creditworthy customer may be awarded a credit line of $20,000 and terms of Net30, as opposed to a COD customer or a Net60 customer. Also take a look at the client’s timeline: Will your guys need to work overtime or weekends to get the job done?
These terms are custom for every shop, every client, and every fleet. But all terms need to share one common attribute: ensuring that you’re covered for all contingencies. Consider deposits on the entire fleet. Or consider partial payments or progress billing. Trust me, when a problem arises here you’ll be very glad you did.
Did you enjoy this article? Click here to subscribe to the magazine.