Latest / Closing Sales in Nigeria - Sales For The Nigerian Business Person: The Sales and Marketing Blueprint / Get Paid! Essential Strategies for Assessing Customer Credit

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Get Paid! Essential Strategies for Assessing Customer Credit · Closing Sales in Nigeria - Sales For The Nigerian Business Person: The Sales and Marketing Blueprint

0:00
Hello and welcome. My name is Tavishima Aide.
0:04
I solve sales and marketing challenges and I'm making
0:07
today's recording at an undisclosed location in Abuja.
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But yes, I'm in a car park, so expect to hear some
0:13
interruptions in the background. Now, the goal of this podcast is
0:16
business education. So please spread the word so
0:19
that your friends and family members in Nigeria and abroad
0:22
can benefit from the questions that we tackle.
0:24
They can do that by subscribing on Spotify, YouTube, Apple, or
0:28
any player of their choice. And if you'd love to connect
0:31
with me, you can call SMS or WhatsApp me on 08064662140.
0:38
Today on the podcast, we're going to be looking at another
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listener question. It's been a while now.
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This one is from Mr. Andrew from NASA and we're going to be
0:50
looking at how to determine credit worthy customers.
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And the reason why is because Mr. Andrew from Nasrara has
1:00
issues with her customer debt. Oh, by the way, thanks to Josh,
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I believe, who sent in some, he made a comment on one of the
1:11
podcast episodes about how his English teacher taught him how
1:14
to pronounce death and debt. So it's going to come into, it's
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going to come in handy today. So hopefully I'm pronouncing the
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words correctly. So DEBT, debt, customer debt.
1:29
So Mr. Andrew, now he has issues with customer debt because he
1:33
has given credit to some guys and, you know, people shout out
1:38
owing him money. And this is something that
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happens to some of us, you know, at one time or another when we
1:45
get into business, you know, somebody says, and you know
1:49
what, let me just drop 80% now, I'll give you the balance next
1:53
month. Or another person will say, you
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know, maybe the amount on the invoice is 123,000 and then they
2:01
transfer 100,000 and they say I'll sort you out that 23 K,
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I'll pay you next week. So whether it is that we're
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actually giving people money as in, you know, let me borrow you
2:11
money, pay me back next month, or whether we allow people to
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pay a deposit and then the balance is owed, you know, next
2:18
month or in two months or whatever.
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Lots of us are giving out credit to customers.
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But a lot of us do not have the conversation ahead of time who
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is a credit worthy customer Because it's not everybody that
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you should allow to drop 80% and then, you know, bring the
2:37
balance later or the invoice is 120 K and it's OK, you know
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what, let me drop 100 now the 23, I'll search you later.
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You know, not everybody is, is everybody that you should give
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credit to. So that's what we're going to
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look at now. How do we determine creditworthy
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customers? Because this is a real live
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issue. In fact, I know that there's
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somebody listening to this podcast right now.
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Right now, I'm sure there's somebody like, you know, 250K is
3:04
still outside. You haven't collected because
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you gave credit to one or two people.
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Now the first time Mr. Andrew asked this question, we
3:13
discussed BNPL, that is buy now, pay Later because they are BNPL
3:20
service providers in Niger right now, buy now, pay later that
3:24
allow you to pass along the business risk.
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And I think we'll try and shed some more light on that.
3:33
So basically with buy now, pay later people, your product is
3:37
there. There's one site I found in
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Lagos, you put their product on their site and basically what
3:44
happens is that, you know, you get your money, I think you get
3:47
it at a discounted rate. So with that way there is some
3:51
gap in between so that the company when they finish
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collecting their money in full from the person who is supposed
3:58
to pay you, you know there's some profit on top for them.
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So I think that's how these buy now, pay later companies work.
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But basically it's one of it's a way to de risk by yourself de
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risk at this whole thing of of credit.
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And in fact, when I answered this question on the radio show,
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there were people who called in to testify because even in
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Abuja, I've seen some companies like that because I went in to
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look at some brand new tablets because I'm currently, I do all
4:29
my work from my phone and I'm using the Xiaomi 13 CI, think
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it's like a 6.7 something inches screen.
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I mean, it's alright, but The thing is I'm not as young as I
4:40
used to be, so my eyesight is failing me.
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So I think now I need something that's like 8 inches, 10 inches.
4:45
Eventually I'm going to get one of those foldable screens,
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especially the ones that folds into 3 so I can just, you know,
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fold it down and use as a phone and then open it up.
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And then The thing is like a 10 inch iPad or something like
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that. So I went there now and I saw
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something that looked sweet. It looked very, very sweet.
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Then I said, sister, how much is this there?
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And then she said 300 and something KS.
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So OK, I'll put the thing down. And I was about to leave.
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She said, oh, don't worry, we have services where you can put
5:17
a deposit now and take the deposit and then pay the balance
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over XYZ months. I said, are you serious?
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She said yeah. Then she gave me a flyer with
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the name of the company there. So I'll be in touch with the
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company. So the scope is if I called the
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company and you know, the company was like, OK, you sound
5:32
like a Courier guy. I want with their processes.
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I will now take the tablet. I don't know how much I'll have
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to drop, but then I have to pay the balance over time.
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So I thought somebody called into the radio show and
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president boss, you know what you're saying is true.
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The same thing happened to me. But then this is the scope, this
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is the security. Because me, I'm always
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wondering, I was wondering, so I'll just take this tab to work
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out like this, like how you how you make sure I pay this money?
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So the guy said what they do is there's a way that they lock the
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device. So let's say it's the 15th of
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every month or whatever of every month, your payment doesn't come
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through, the device will just seize.
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The thing will just lock. You can't do anything again
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until you make payment. Then the device will now open.
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I was like, OK, OK, I see. Makes sense now.
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So you can see that there's some companies in Niger who are
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making this their business model.
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Now, as you want to sell your market, no problem, we'll help
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you sell your market. You want to give people credit?
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No problem. You can be giving people credit.
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We are the ones who will determine, you know who will
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determine, as one of my teachers used to say, secondary school
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guy usually determine, say determine.
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So what ones? I will determine how you get
6:41
your money back, you know, very quickly.
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So yeah, these companies are out there.
6:45
So buy now pay letter companies. But what did the guy call it?
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I can't remember the name. It's like in Lagos, in Abuja,
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they really have one kind nickname like that.
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So these services do exist. Then I wanted to look at some
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other options for deciding who to give credit to.
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And unfortunately, we're going to look at some big boy, big
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girl options because there are lots of also listening to this
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podcast now, who are SMEs? There are some of you who have,
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you know, 3000 products, you know, products you're selling
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355000, you know, 75. So when everybody's an Adoco and
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everybody has arrived yet, so some of these options might not
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be available to you, but still I'm going to run through them
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because I know that the people who listen to this thing span
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the gamut. I mean, because I know podcast
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listeners who are doing, you know, like that kind 10 million
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monthly. And I know some people who are
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just celebrating like they have finally hit 100K per month and
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they've done that for the last 3-4 months and they're
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celebrating. So between 100K and 1M.
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So between 100K and 10M, you know, we're all here, we're all
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listening, we can all learn. So one of those is credit
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bureaus. I made a podcast on credit
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bureaus a long time ago, so I can't even remember the podcast
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name. But anyway, I made a podcast
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about credit bureaus a while ago.
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I used them as an example. So credit bureaus is one option
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that we can use to determine who we're supposed to give credit
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to. Because, by the way, this only
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applies to big boys and big girls.
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You know, they don't deal with because they paid service and
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they don't deal with people who are, you know, doing small,
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small money. Now, credit bureaus are all, I
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define it now, OK Credit Bureau is a business that looks for
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information around people's payments and spending and their
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borrowing history. They have all the information so
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that if I come to your shop now and you want to decide whether
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you're supposed to give me money.
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But like I said, he's a big boy, big girl thing.
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So let's say I decide finally that you know what?
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I'm tired of recording at home. I'm tired of recording in car
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park. I'm going to move into a six
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bedroom house. I will take one bedroom and just
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convert it entire to studio. So I now come to your own place
9:00
and I say, OK, give me microphone, give me computer,
9:03
give me some proofing, give me cabling, give me everything so I
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can set up the studio by the time you write the bill.
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Now the bill comes up to maybe call to like, you know, 25 M,
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something like that, 25 mil. And then I say OK, you know
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what, 25,000,000 no problem, I will give you 15 now then the
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remaining 10 million, I'll be paying it 22 million until I
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finish everything. And then you say OK, no problem.
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But you now want to decide can I give this guy this kind of
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credit? What you will now do is you will
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now go to credit Bureau. I say credit Bureau.
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Get this guy Tarish Shima. I've given a bill 25 K
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25,000,000. The guy said he dropped 15.
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Now the remaining 10, he will settle it 2222M until everything
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finished. Is this guy credit worthy?
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So is the credit Bureau that you go and meet?
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So the credit Bureau now because they have access to, you know,
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my banking history and you know, stuff like that, they will now
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be able to say that look, Tavi Schumer is no credit worthy.
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He's owing these people so, so, so amount.
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By the way, I'm not owing anybody or they will now say
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this guy is credit worthy because last year he borrowed
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400 million and he paid before all of the loans were due.
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So he's a correct guy, give him this money.
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So that's what the credit Bureau does.
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Also. One moment, he's beginning to
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drizzle here. Let me just wind up the window.
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You know the heat was killing us in Abuja were praying for rains
10:31
and you know now the rains have come and because of rains, now
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you can't wash clothes again because if you wash clothes
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before you dry, it will take like four or five days.
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And what was that? So the credit Bureau now that
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ones, I will now tell you, this guy, he's credit worthy, giving
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the money or this guy is not credit worthy, don't give him
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the money. So those are credit bureaus now
10:54
because it's been a while since I made a podcast episode about
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credit bureaus. I can't remember the names, but
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just rest assured that this is becoming a viable business in
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Nigeria. And at the time I made a podcast
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episode about credit bureaus. I gave you guys the names of
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three credit bureaus that I found on LinkedIn.
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So these businesses do exist and their services are necessary for
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big boys and big girls to determine who are we going to
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give some credit to. Then another way of deciding who
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is credit worthy as a customer, who should I allow to drop 50%
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down and then pay the rest later is to look at your existing
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payment history. Look at your internal records.
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You will see that some people have a history of consistent
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payment that OK. Before this guy bought something
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worth 5K, he paid on time. He bought with the credit he
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paid on time. After a while he started buying
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things of 7510K. He was still paying on time.
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Then he started buying things worth of 15K.
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He was still paying on time. Now he wants to be buying things
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of 22 K and he's asking for credit.
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You can now say OK, because me and this guy will be rolling
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from the stage of 2K up until up until 17 Ki think this guy is
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he's alright. This baby is alright.
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Let me give her credit. So for those of you who have,
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who are in the business, what in what will I say in industries
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where there's a tradition of credit?
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Because my, my, my sisters, they used to sell.
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They used to buy stuff from the UK from Cortana and then come
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and sell. But you know, stuff for, for
12:43
women, because they say men don't buy anything.
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And I wonder why people keep saying that.
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They say that men don't buy shoes, men don't buy clothes.
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I mean, like, what do you mean? Do we walk around naked?
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But anyway, that's what my sister say.
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And I've heard other people say since then that, yes, that men
12:55
don't buy anything. So they used to buy, you know,
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you buy jeans, you buy a shoe, you buy a bag, you buy
13:02
accessories, all kinds of things, you know, for men and
13:04
women, sorry for women. And I noticed that in that
13:07
particular business, it's like there's a tradition of buying
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things on credit. Somebody can come to the shop
13:13
and carry things like 400K, but then they say the cash that they
13:18
have on them is just 250. So they carry things worth 400K,
13:21
they drop 250 now and then they say next month they will give
13:25
you the balance. And just looks like that's how
13:27
the industry runs. You know, quite quite frankly, I
13:30
find nothing scary because also I don't like this whole thing of
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at the end of the month I'm now chasing you, I'm now calling you
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and everything. I don't like that kind of
13:36
hassle, but it looks like it's just one of those things for
13:39
certain kinds of businesses. Like I said, certain kinds of
13:45
businesses because I've not heard of anybody buying car on
13:47
credit. So it looks like when it comes
13:49
to these things, you know, women's handbag, women shoe,
13:52
women breezy women accessories, you know, bungles things like
13:58
that, not what happens. But when it comes to the car
14:01
space, it's like the person says, look, shut up.
14:03
What do you mean credit, my friend?
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Will you give me my 14,000,000 now cash?
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If you don't have 14,000,000, please move.
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Somebody else is willing to buy this car.
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So no credit in certain kinds of businesses.
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So if you look at the person's payment history, look at your
14:16
internal records, does the person have a history of
14:19
defaults? Don't give them money.
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Does the person have a history of consistent payments?
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OK, you can. You can't take a chance on that.
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Oh, sorry, this rain is really increasing.
14:29
I bet you just wind up the whole thing.
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So one moment and we just wind up full.
14:37
OK, All right, so that's taken care of.
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So I'm looking at my notes so I remember where I was.
14:46
OK, so apart from looking at existing customers payment
14:49
history, then there are some industries, this one only
14:53
applies to big boys and big girls, unfortunately, where you
14:56
can take trade references. So you can take references from
15:00
other buyers that person has from other buyers.
15:03
But of course, be sure to cross check because when you want a
15:06
reference, usually people always give the names of numbers of
15:10
people who say good things about them.
15:12
So back to this example now where I say I'm tired of
15:14
recording in the car, I'm tired of recording in the living room.
15:17
I will enter 6 bedroom apartment.
15:18
I'll convert 1 bedroom to my studio.
15:21
And I now deck it up with everything.
15:23
And I need 25 M to now invest in this place to now make my
15:30
recording space, you know, correct.
15:33
So if I go and meet you now and you say OK, no problem, the bill
15:39
is 25 M, but I want to drop 15 now and then I want to be paying
15:45
the balance to to M every month until everything is sorted.
15:48
You can now say, OK, give me trade references.
15:52
That means I'll now give information of people that I've
15:54
done business with in the past. You'll be able to call them up
15:56
and say, look, Terry Simmons says that he wants to do this,
16:00
you know, build this. I who pay everything now.
16:02
How far is he a correct guy? Does he pay his money on time?
16:04
Was the experience like so the trade references?
16:07
But of course you can see that is only available for big boys
16:11
because you can be buying a product that is worth, you know,
16:15
7-5 or ten key or 15 key and then be asking for trade
16:18
references. So this is just for the big boys
16:20
and the big girls, but that's an option.
16:23
Then I came across a test about some of us can use now that
16:27
financial institutions use. So let me check the time.
16:30
OK, This is 9:45. OK, I have to leave here in
16:33
another 20 minutes. OK, So this is a test that
16:38
financial institutions use to determine who they're going to
16:41
give money to. So if you go and you want to
16:43
collect loan from access banks, Zenith banks, Stampic, IBTC, all
16:47
these people, you know, there's a certain there's a test that
16:49
they will use. But of course, if you remember
16:52
from previous episodes, if it is for business purposes, you also
16:56
have to make sure that you have your business plan, Make sure
16:59
you wrote your business plan. You know, everything in check
17:03
dot your i's, cross your T's, your protections are all there.
17:06
You know, they need a business plan to make that decision
17:09
decision. But then there's also another
17:11
test that is called the 5C test that I found and let me share
17:15
with you today. And the 5C's are character
17:19
capacity, capital, collateral and then conditions, I repeat
17:26
and then I'll explain. So character capacity, capital,
17:34
collateral and conditions. Now character just means
17:37
willingness to pay. We're trying to figure out this
17:39
person's willingness to pay. That's what character means over
17:41
here. It doesn't mean this person a
17:43
good person or this person is a bad person.
17:45
So I can be a non born again Sinner, non believing, whatever.
17:52
But you know, you don't care about that.
17:54
You only just that you want your 25 M because you've given me
17:57
equipment for my studio. So when we say character, we're
18:00
concerned with willingness to pay.
18:01
You know, you're not concerned about whether I'm a good boy or
18:03
a bad boy. If I'm a bad boy, that's up to
18:06
me. You only just want your 25 M So
18:08
that's what character is all about in this context.
18:13
So that is how, you know, we've been trying to figure out, you
18:17
know, looking at payment history, the credit Bureau, you
18:21
know, they're just trying to answer the question of
18:22
character. Is this person willing to pay?
18:25
Has he done things in the past that can give us good reason to
18:28
believe that in the future this guy will be willing to pay?
18:32
So we already understand character.
18:33
Now capacity. Capacity is a question of cash
18:36
flows or income. Does it look like this person
18:40
has money coming in that can sort this thing?
18:43
And that's also something that we do on an individual level.
18:46
Somebody says, I beg give me 15 Ki will sort you next week.
18:51
And the person that is talking to you, you know that this
18:53
person is a lawyer and he's ending in hundreds of thousands
18:57
and he doesn't OK, you know what, this is a rough patch.
18:59
Let me just send this guy 15K, you know, next week he will sort
19:02
me back. You know, that's the question of
19:04
cash flows. That is just the thing
19:07
essentially. So there's some people that do
19:09
things like that, that somebody comes to your shop, the person
19:12
says, OK, everything is 400 Ki, want to drop 300, I'll pay the
19:17
rest. But, you know, maybe because you
19:19
guys hang out or something, you know that.
19:21
OK, normal, normal. This guy is a big boy.
19:25
Maybe there's some small downtown, but there's a
19:27
container on the high seas, so you're expecting something to
19:29
click. And yeah, so that's the whole
19:32
thing. Cash flows, cash flows, income.
19:34
Does it look as if the person, as if enough comes in?
19:38
And when I tried getting a loan from Sterling and that's how
19:42
Sterling disqualified me. So I went to Sterling.
19:44
This was a long, long time ago. I went to Sterling.
19:46
I said Sterling, I heard people are giving loans.
19:48
I say yes, Sir, I was OK, good. I want a loan of social.
19:51
So they said no problem, Sir, can you give us all your account
19:54
details? I said account details were so
19:57
do you have other bank accounts? I say yes, I do.
19:58
So I furnish us the bank details.
20:00
So I give them the details of all my accounts.
20:03
Then they run it through some fancy AI software, something to
20:06
analyze. All the cash flows, how much
20:09
money comes in, how much money comes out.
20:11
And so I'm say they please confirmed are you an employee or
20:15
yourself employed? And say self-employed say OK,
20:16
OK, yes, yes, yes. Because based on our analysis,
20:19
we can see that the cash flows that come in are not regular and
20:25
they are not what's that word? I can't remember, but not a
20:28
steady amount 'cause if I say salary earner, you'd be seen
20:31
that every single month 400K will just be entering my
20:33
account. Bam 404 hundred 404 hundred
20:36
since I'm self-employed and you know my income is based on also,
20:40
you know, there's sometimes when the money will enter big bum and
20:43
then next month zero, then maybe the month after that medium and
20:48
then maybe another two months big money bam.
20:50
So so they said because of that now because the money is up and
20:54
down, up and down, The thing is not coming constant.
20:56
We say they will not give you a loan.
20:58
They say, OK, thank you very much.
21:00
I didn't get a loan, but at least I got an education about
21:04
how banks decide on who to give people money.
21:06
So that's this capacity. Now, cash flows is money coming?
21:10
Is money going? OK, Money is coming and going on
21:12
a regular and it's coming steady every month.
21:15
I can give this guy a loan. I can give this baby loan.
21:17
Then capital. You're trying to gauge people's
21:20
assets or investments. That's the one that Nigerians do
21:25
a lot of time, which is that they will, they will, they'll be
21:28
reaching you, they'll look at you up and down.
21:31
They'll look at your shoe, they'll look at your watch,
21:32
they'll look at your car. They'll say this guy has assets.
21:35
Now let me give him a loan. By the way, he's not a guarantee
21:39
that because the guy is driving Ben's Jeep and he's wearing
21:43
Rolex, he's not a guarantee that he'll pay you the money or so be
21:46
careful when it comes to this whole thing of assets, assets
21:50
and investments. So yeah, this one that we do a
21:53
lot, you look at people and then you rate them up and down.
21:55
I've been disappointed before and I can assure you will you
21:58
will surely be disappointed if you are looking at the car they
22:02
drive, the house that they have, you know, things like that.
22:05
But yes, financial institutions, they look at people's assets,
22:09
you know, what are the old, the holdings that they have, you
22:12
know, things like that, what the kind of things that they
22:13
involved in. So capital is it then
22:16
collateral? Collateral does means what are
22:18
you dropping just in case you can't pay so that they will now
22:22
collect money back. And of course, we all know that
22:24
banks love landed property, especially landed property in
22:29
commercial districts. So if you go and borrow money
22:32
and you have 5 plots of land in Wusetu, you drop one plot of
22:35
land, they'll be very happy. Or you have one plot of land in
22:39
Leki, you know they'll be very happy to give you the loan
22:41
because you know if you default, they can take the land, they can
22:43
sell it, they can make their money.
22:44
So what are you dropping? So there are some businesses
22:47
that ask people to drop to drop collateral.
22:52
So yes, you want credits. No problem.
22:54
We'll give you the credits, but then drop this with us just in
22:58
case. Then.
23:00
OK, conditions. That just means economic factor
23:03
because economic factors, because sometimes the economy is
23:06
good and like, OK, economy is good, this guy might pay.
23:08
And then sometimes the economy is bad, the economy is seriously
23:12
dry and you're like, I can't give anybody loan now because in
23:16
this thingable economy, if I give anybody loan, the chances
23:20
that they will default is high because we're in periods of
23:22
hyperinflation. So that's the 5C test.
23:25
Look at the person's willingness to pay.
23:27
That is character. Try and figure out the person's
23:30
cash flows or income, that is capacity.
23:32
Try and figure out the person's capital, the kind of assets that
23:35
they have. The rationale there is somebody
23:37
with big assets will be able to pay you, Somebody who has more
23:40
assets will not be able to pay you and collateral, no problem.
23:44
What is the person dropping? Is the person dropping something
23:46
substantial? No problem that some of these
23:49
loan companies now you deposit your title documents for your
23:53
car or something like that and then you collect loan.
23:56
You know the idea being that if you can't pay back your loan, do
23:58
come and seize your car then. Well, at least from based on
24:03
advertisements I've been seen in Abuja, it looks as if that's how
24:05
people want to run this thing. But I haven't heard of anybody
24:09
who has. I haven't heard of anybody who
24:11
has collected loan from these companies or who has gotten into
24:13
trouble yet. But I'll keep you guys posted.
24:17
Then also, the conditions, you know, is the economy flying or
24:20
not now determine whether I give loan?
24:24
So these are some of the things that I spoke about when it comes
24:29
to determining who is creditworthy as a customer.
24:34
However, there was one point that I wanted to stress then and
24:37
I'm stressing it now. The problem sometimes it's not
24:40
that you're giving credit to people or not.
24:42
The problem is you have not determined these policies in
24:45
advance before. How do I put it?
24:51
If you wait until somebody comes to come and ask you, OK, how
24:55
far, let me drop 80% now and then pay the rest, you create
24:59
lots of problems for yourself because you haven't thought
25:00
about all these things in advance.
25:02
You need to sit down with your husband or sit down with your
25:06
wife or with your business partner or with your mentor or
25:09
with your whoever and determine this thing in advance as a
25:14
business, what is the policy? Will I give credit or not?
25:18
And if you and your spouse or your mentor or your advisor,
25:24
your whatever your accountant, you decide no credit, then the
25:28
answer will be always no. Chukudi, you're my guy.
25:33
I understand. But you know what?
25:35
This is beyond me. Me and Madam, we sat down.
25:38
We already discussed, and the accountant has signed off on it.
25:40
And Chukudi, Bros, I beg no Vex. This is beyond me.
25:45
You know, I can't give you, I can't give you the credit.
25:49
You're my very guy. I trust you.
25:51
You're my guy. As in, you know, since, well,
25:54
five years old. You're my guy.
25:55
But look, this is beyond me. Me, Madam Accountant, if you can
26:00
convince Madam an accountant and no problem.
26:02
But you know I can't give you the credit.
26:04
So once you've decided no credit, the answer is no.
26:10
But if you now decide that we will be given credit, sit down
26:15
with your spouse, sit down with your business partner, sit down
26:18
with your accountant, sit down with your mentee, sit down with
26:21
your pastor, sit down with whoever it is whose opinion you
26:24
value in these things. And you now determine if we're
26:27
giving credit, how much credit are we going to give?
26:31
If normal, normal, you allow people to be taking credit on
26:35
items that are 100 hundred K100100K, the day you decide to
26:40
give credit that is on, you know, 10s of millions that can
26:43
be the one that will bankrupt you. 100100K people have been
26:46
paying. People have been paying the one
26:48
that is 100 million. You now give credit, the person
26:50
defaults and then wahala, the business will now collapse.
26:54
So we decide how much. Credit are we going to give for
26:59
how long can we allow people to owe us for two months, three
27:02
months, six months, six years? Decide the how long thing
27:07
especially because that's that's what will now let you know when
27:10
you should now get lawyer involved or police involved, or
27:15
village people involved, or church people involved, or
27:17
church or mosque people involved or village elders involved.
27:23
You know, so you. Determine how long.
27:26
Then you also determine the interest.
27:29
If we're letting people have credit, are they paying us back
27:31
the exact amount or every month? Are we going to be adding one 1%
27:35
or two 2% or 1010%? Decide.
27:40
Then. If we're going to allow people
27:43
to have credit, are we going to be giving them, you know, 100%
27:47
free? By the way, I do not because of
27:50
the rubbish I've seen in the event space, I do not advocate
27:54
at all that you allow somebody to have credit 100% in advance.
27:59
I do not. Anyway, like I said, business
28:03
traditions, you know, determine because if you want to put your
28:08
products in retail shops, actually the whole thing is on
28:11
credit. The person who?
28:13
Owns the shop. If you want to sell your things
28:15
now and you want to sell it in, they select Grand Square in
28:19
Abuja. When you go to Ground Square,
28:20
Ground Square will not give you a cover.
28:23
They will collect your product and then they'll put it in
28:25
store. They want to sell it first, then
28:28
they'll put it in the contract that payment terms is net 30 or
28:31
net 60. What that means is you can
28:33
deliver chicken, excuse me to Ground Square and that chicken
28:37
consignment is worth 6,000,000, but they are not paying you
28:41
until two months time. So unfortunately for that kind
28:44
of business, that's just how it works.
28:47
You're always on credit, the shop is always owing you.
28:50
You know, you either like it or you don't.
28:53
And that's why I tell people who want to get into shops that are
28:56
you aware that this is their payment terms?
28:58
Like you can't negotiate, you can't change it.
29:00
It just is the tradition, whether in Nigeria or Ghana or
29:06
the UK or America. I don't know if it's the same in
29:09
Afghanistan or Australia, but these countries that I've
29:13
mentioned, I know that one for sure.
29:15
If you want to go and put your thing in a major shop, just know
29:18
now they are not paying you nothing.
29:23
They want to sell it first and then out of the sales, they'll
29:26
now want to pay you then they'll now put it in their contract
29:28
that we won't pay yourself after 30 days or pay you after 60
29:32
days. So it is very possible that if
29:35
you're doing business with these chain stores that you will drop
29:38
your product 1st of January but you won't see payment until 31st
29:42
of March. So it happens, you know, read
29:45
your contract, your contract properly.
29:49
So I said all that I prefer let somebody drop something a
29:53
partial advance. In the wedding.
29:55
Space in Abuja anyway, we had a tradition that's during my own
30:01
set photographs in my own time, we had a tradition of you try
30:05
and collect like 70 or 80% of your money so that even at 20%
30:10
if they don't pay. So if she's gonna check time,
30:13
OK, almost 10 after leave here at 10.
30:16
So if they don't pay, at least at least it's not too bad.
30:23
At least you covered your costs and you had small money for fuel
30:27
and shawarma and credit. But you know, you're not in too
30:31
much of a bad place. So my own personal opinion, sha,
30:34
this whole thing of oh, you're my guy, just carry it.
30:36
Just go. Don't do that.
30:37
Let the person drop something 30%, fifty percent, 80%.
30:42
You know it's you know. But The thing is, determine it
30:45
ahead of time. So if you've sat down with your
30:49
spouse, with your mom, with your dad, with your mentor, with your
30:52
pastor, with your imam, with your business advisor, with your
30:55
accountant, and you have decided that we'll do credit on partial
30:59
advance, but everybody must pay 85% and your homeboy comes and
31:02
he has 83%, the answer is no. I have.
31:08
Discussed with my board. This thing is beyond me.
31:13
And as a. Board or as a business we have
31:15
decided that people must pay 85%.
31:18
So Chukudi my guy. I understand things are rough
31:21
and I know you only have 83% bonusly Chukudi between you and
31:26
me. I swear down I can't do this
31:28
thing. I can't, you know, if you can't.
31:33
Convince Madam an accountant and the board, you know, this is a
31:35
business tactic where you push the responsibility to other
31:37
people. So if you can convince Madam
31:40
accountant, pastor, Imam, mentee, if you can convince all
31:44
of them, sure, no problem, we'll take your 83%.
31:47
But you really know Vex, I beg is beyond me. 85%, that's all we
31:53
need. If you have 80 percent, 85% now
31:56
I will sign this thing and we'll get this thing done.
31:59
So decide in advance. Then he also determine whether
32:03
people are going to bring guarantors or not.
32:07
But. Don't wait until somebody shows
32:10
up. They now start trying to figure
32:12
this out. This is the wrong time.
32:13
You'll be under too much pressure.
32:16
You might be under cash crunch pressure.
32:19
OK, let me just collect money shall let something be going.
32:22
Or you might be under personal pressure to give my be pressure
32:24
on you like an attavation as me. Now what kind of rubbish is
32:27
this? I might know your boy.
32:28
I've been there for you. You'll be under kinds of
32:31
pressure. So determine these things in
32:33
advance. The worst time to decide is when
32:38
the person is in front of you. Please, if you didn't learn
32:41
anything today, learn that one then.
32:44
From a sales perspective, these are things you always bring up
32:49
in qualification conversations. Oh, fantastic.
32:53
You're interested in this and this.
32:54
OK, no problem. Option A, Option B, Option C.
32:57
You're aware that they can cost anything between 5 million and
33:01
3.5 million. Is that something you're willing
33:03
to invest in? Say it upfront so that the
33:07
person who thinks your prices are ridiculous let them run
33:09
away. The person who thinks he can
33:12
make it but he will need some help.
33:15
The person who mentioned it now? OK, Between 3.5 and five MI
33:19
think I can make that? Are you open to flexible payment
33:23
options? Then you don't have the
33:25
conversation. Oh yeah, sure.
33:26
No problem. We're open to it.
33:28
The policy of the store is that you make a depositive so, so, so
33:31
amount and then the rest of the payment is supposed to be on
33:34
this, that, that, that, that, that.
33:35
Is that something you're comfortable with?
33:37
The person says, oh, OK, fine, no problem.
33:39
Continue. The person has been advised.
33:42
Well, you see. You have the conversation at the
33:45
beginning, you don't wait until the end.
33:49
When it's now time for delivery and everything, you now start
33:51
having all these conversations. Have these conversations early.
33:54
For me, This is why I like to bring up pricing early in the
33:58
beginning, you don't know enough to give an exact price.
34:00
So always give them a range. OK, based on what I've been
34:02
discussing, it looks like we can between ABC and XYZ.
34:06
Is that something you can afford?
34:07
Is that something you're willing to invest in?
34:09
Is that something you're are you willing to move forward on those
34:12
terms? You know, try and get feedback.
34:14
They will say yes or they will say no.
34:16
Either way, you know where you're heading.
34:17
So bring these things up in advance.
34:19
Then another thing that I mentioned, apart from
34:21
determining all these things in advance, you also have to be
34:26
proactive and monitor payments. If they say they are going to be
34:29
paying on the 15th of every month, you don't wait until
34:34
16th, 17th before you start calling these people.
34:36
Be proactive on the 1st of the month, say true Goody, what's up
34:40
my dear? Now Brobeck, Novak's nobody say
34:43
I don't stress you, but sure you know 15th I'll be so I don't.
34:47
I got you 15th no problem. You see the money.
34:49
In fact, you won't even reach 15th.
34:51
On the 12th, I'm expecting some money.
34:53
You will see payment on the 12th and I said you could be how far?
34:56
Oh bro I beg no vex I forgot the guy on our big transfer.
34:59
You stay on top of it. Your payment date is 15th.
35:04
You don't start harassing people on the 15th, you start harassing
35:07
them before the 15th. Whether they start one week
35:10
before, 2 weeks before I leave it up to you.
35:12
But if you wait for default man that is stress.
35:18
Serious serious stress. So be proactive and take quick
35:22
action. Then when people are overdue, if
35:27
they're supposed to have paid on 15th, they haven't paid on 15th
35:30
is now 31st or more quick action.
35:33
And that's why I say you determine these things ahead of
35:35
time with your Business Council, with your board of director,
35:38
with your spouse, with your accountant, with your whoever
35:42
this person is overdue. What are we going to do?
35:44
Is it lawyer who will call? Is it police who will call?
35:47
Are we going to call family and friends to shame the person?
35:50
Why are we going to call wait until we go for PowerPoint
35:53
meeting and then involve the elders, you know, from the
35:55
village? But either way, take action.
36:00
So those are just the main things.
36:02
Determine ahead of time what the policy policy is.
36:05
Monitor payments and be proactive.
36:07
Don't wait for default. If you wait for default, if you
36:11
wait until the 16th, the 17th, you're giving yourself
36:14
unnecessary BPI can assure you. Then.
36:19
Also be aware that for certain industries buy now pay later is
36:24
becoming a thing, so for solar there is buy now, pay later.
36:29
So if you're on the. Solar sales, you can go and
36:32
speak with some companies. One of my clients, they have
36:36
those sorts of arrangements in place, so for them it's not a
36:39
problem. Somebody wants to buy solar, the
36:42
amount on the bill is 40 M but they say they only have 25 now
36:47
you want to pay the rest later, it's not a problem.
36:50
This service. Provider that do send them to
36:52
call these people, You guys will negotiate the terms.
36:54
As soon as you're done negotiating the terms, we'll
36:56
deliver all the solar panels to your house.
36:59
So for solar, it's done in Lagos.
37:01
For mobile phones and digital gadgets and things like that,
37:04
it's done in Abuja, it's also done.
37:07
So ask around in your industry, try and figure out if buy now
37:11
pay later is is available because that that will help you
37:15
to de risk collection on your part and make business easier.
37:20
So those are just some ideas around determining who is your
37:23
creditworthy customer and figuring out you know, when to
37:25
give people credit. But from my own personal
37:29
opinion, to be honest, I find this thing very, very scary.
37:33
So as I did, I just stick to my wedding photography days and I
37:37
try and collect my 80% upfront. Then also try and research the
37:42
company that it is Because there was one time somebody was trying
37:45
to do business, one company mom, she called the person outside
37:49
and said, look, let me be frank with you.
37:51
You know this business, they have a reputation.
37:53
These people, they never pay all their money complete.
37:55
So this is what you do, this amount that you have on the
37:57
invoice, is this what you like? The person say yes, I said no,
37:59
no this won't be enough. Take that and then increase it
38:02
by XYZ amount because this company they are going to meet,
38:05
they have a tradition of only paying people around like 7080%
38:10
of the money. So you'll be able to collect
38:12
that whole thing full. And the person was thank was all
38:15
thank you very much ma. Thank you ma.
38:16
Then they changed the voice and they went ahead and then guess
38:19
what happened as mom she said at the end of the day the company
38:22
only paid them 80%. I refused to pay the 20%.
38:26
You, that person came back to come and tell my mom, thank you,
38:30
mommy, thank you, thank you. The thing happened exactly as
38:34
you said. If I didn't do it, I would have
38:36
been in serious busy right now. So always be doing your due
38:41
diligence that OK, you go and ask around, you know, who has
38:45
dealt with this company before, who has dealt with this person?
38:47
How is this person? How do they do?
38:48
How do they behave? You know, always do your, you
38:52
know, do your diligence because men or some of these things,
38:55
especially when the contract is millions and millions and
38:57
millions after you've delivered do now start especially in
39:02
Nigeria where if the person you're dealing with is a, is a
39:05
big somebody, you know, he's a politician or he's a big boy,
39:08
he's a big girl. You can't call police to harass
39:10
him, you know. So anyway, let me just leave you
39:13
there. Besides, I have to run anyway.
39:15
So that's all for today folks. Remember if you'd love to
39:17
connect then call SMS or WhatsApp me on 08064662140.
39:24
Thank you very much for your time and attention.
39:26
I will catch you next time. Same place in your headphones or
39:29
in your speakers.