Click to read the original text for details. The difficulty of payment collection for distributors is already an indisputable fact in the food industry. Therefore, it is of particular significance to actively explore the causes of this long-standing problem and find ways to solve it, so that distributors can get rid of the troubles of payment collection and reduce operational risks. Various Manifestations of Payment Collection Difficulties Where exactly is the difficulty? In actual market operations, payment collection difficulties manifest in the following forms: 1. Inability to collect or zero collection Food products typically enter sales channels such as distribution channels, retail terminals, hypermarkets, and catering terminals. Due to special reasons, such as poor management leading to restaurant transfers or shops disappearing overnight, some payments can never be recovered, resulting in bad debts or doubtful debts. 2. Can collect but with great torment Although the payment can eventually be settled, due to factors from the distributor or manufacturer, such as untimely delivery or poor service, customers deliberately make things difficult, having the money but not paying, until you are exhausted, then they "fish" it to you bit by bit, making you completely convinced. This is more common in KA stores, B and C category chain stores, and catering terminals. 3. Can collect but with prolonged delays Due to product characteristics and brand influence, such as low sales volume or long usage cycles, some subsidiary food products have relatively long payment collection periods, often requiring 3 months, half a year, or even longer, making distributors wait anxiously for the money. 4. Can collect but with twists and turns Some customers seize on the "shortcomings" or "defects" in the distributor's operations to threaten, such as demanding VAT invoices, discounts, or store anniversary fees, otherwise they will remove the product from shelves or refuse to settle, "threatening" or "intimidating" the distributor, making the payment process full of twists. Of course, in market operations, failing to comply with industry "unspoken rules," not being good at "public relations" and "dealing with people," resulting in "difficult doors, ugly faces, and difficult accounts" during payment collection, are also abnormal manifestations of payment collection difficulties. Various Causes of Payment Collection Difficulties The causes of payment collection difficulties include the following: 1. Weak brand power A key factor leading to payment collection difficulties is that the product's brand power is weak, with low awareness in sales (stores, retail terminals, same below) or consumption terminals (catering hotels, entertainment venues, etc.). In this case, it is often difficult to negotiate a better settlement period, resulting in credit sales where payment is made after delivery, laying the groundwork for customers to delay payment. 2. Poor product sales After products enter sales or consumption terminals, due to factors such as display, merchandising, peak and off-peak seasons, and brand power, product sales or consumption may be sluggish, with low sales volume and little "cash return" at the terminal, making it easy for them to be overlooked or ignored, thereby delaying settlement time and causing corresponding payment collection difficulties. 3. Many legacy issues Some distributors or manufacturer salespeople, for their own selfish interests of earning salaries and commissions, often make random promises to terminal customers when developing sales or consumption terminals, such as promising rebates, promotional items, etc., which customers "remember well." When it comes to settlement, customers use this as an excuse to demand that the distributor fulfill previous promises, otherwise they refuse to settle, creating difficulties for payment collection. 4. Poor service Some distributors lack service awareness, which is also an important reason for payment collection difficulties. For example, during peak sales seasons, due to supply shortages, they neglect customer relationship maintenance with some sales and consumption terminals, resulting in untimely delivery, delayed promotions and rebate fulfillment, and slow bottle returns for beer and beverages, causing customer dissatisfaction, who then deliberately "find fault" during settlement and do not pay promptly. 5. Too casual credit Some distributors, to show their generosity, often allow random credit after goods enter the store, failing to sign written agreements that would protect their interests and should have been signed but were not. Without formal sales agreements and specific payment terms, only an IOU, it is easy to cause trouble in later collection or waste unnecessary words, resulting in payment collection defects. Of course, other causes of payment collection difficulties include sales or consumption terminals that are poorly managed, suffer heavy losses, and are unable to pay. These should be treated and analyzed differently. Only by clarifying the various factors of payment collection difficulties can distributors take measures to prevent problems before they occur and better collect payments. Various Strategies to Solve Payment Collection Difficulties After analyzing the many causes of payment collection difficulties, distributors need to "suit the remedy to the case" and seek strategies to solve them. In actual market operations, the following strategies can help solve payment collection problems. 1. Enhance marketing power To maximize product sales and form a virtuous cycle of supply, sales, and payment collection, distributors must combine with manufacturers to enhance market marketing power. Specifically: First, find a product that is suitable for the market, meets local consumer needs, has a reasonable price-performance ratio, and has unique product benefit points and "sales appeal" at sales and consumption terminals. Second, prices should match the channel and not conflict. For example, beer products sold in distribution channels should not be sold in catering and nightlife terminals, because consumption levels are different and operation models are different (catering and nightlife require high prices, high promotions, and high incentives). If the same product is used, it is easy to cause price chaos, leading to disputes and difficult settlement. Third, promotions should be systematic and long-term to continuously drive sales and consumption terminals. Advertising makes consumers aware of the product, public relations makes them like it, and promotions make them "love" it. Through promotions, the push and pull forces can be combined to better achieve the "thrilling leap from commodity to money," laying the foundation for smoother settlement. 2. Consultative selling What is consultative selling? It is a method of conducting sales work based on customer needs. Why is it difficult to settle accounts for subsidiary foods or FMCG? Often because the added value or "benefits" provided to terminal customers are too few. In this case, why should customers settle with you? Therefore, distributors should implement consultative selling for terminal customers. The key points are: First, choose good products for customers to sell, putting yourself in their shoes, rather than just for your own profit. Second, provide advice and strategies for customers, telling or teaching customers and their staff how to sell, providing training or communication on relevant content, rather than ignoring them after products enter the store. Instead, provide full tracking guidance. Third, be willing to act as the customer's economic advisor and consultant, providing good suggestions for their future development and offering help within your capabilities, so that customers recognize, admire, and appreciate you from the bottom of their hearts, thereby better cooperating with sales and settling accounts smoothly. 3. Intimate service To better collect payments, distributors must provide intimate service to customers at sales or consumption terminals. What is intimate service? It means providing one-stop service or guidance to customers to gain their satisfaction and praise. For example, implementing convenient and timely distribution functions without delaying customer sales; promoting "dedicated personnel, dedicated management" and "one-vote veto system," etc., defining daily work processes, visit steps, inspection standards, and negotiation content for subordinates, with qualitative, positioning, and standard-setting. By strengthening service concepts and awareness, customers can find no "reason" to delay payment, thereby avoiding payment collection problems. 4. Build good customer relationships Building good customer relationships is a strong guarantee for smooth payment settlement. We are in an era that emphasizes communication. Through good communication between distributors and their staff and sales or consumption terminals, they can exchange information, eliminate misunderstandings, improve service, and establish strategic partnerships, not just transactional relationships. For example, distributors and their staff should find ways to build good relationships with customer bosses, finance, purchasing, and other relevant departments. This can be done by giving small gifts, promotional items, and other "small favors" to win them over; or by providing training to customers and their staff as value-added services; or by holding social gatherings, symposiums, organizing trips, etc., during festivals to deepen emotional exchanges with customers, eliminate estrangement, and make payment collection no longer difficult. 5. Continuous incentives The most effective way to encourage customers to pay better is to use "material inducement" to achieve payment collection. For example, those who pay on time as agreed can be given a certain percentage of rewards; or those who proactively pay within the specified time can be given attractive prizes such as household appliances, constantly whetting customers' "appetites" and prompting them to pay more actively. 6. Improve the payment collection process Many distributors face payment collection difficulties partly because their payment collection processes are not sound. For example, some distributors, for convenience, often do not even sign agreements, only writing an IOU, resulting in no specific execution standards or evidence for settlement time, place, form, etc., in the later stage, bringing difficulty or obstacles to payment collection. In view of this, distributors should improve the specific standard process for payment collection from the beginning when dealing with sales or consumption terminals: when to settle, where to settle, whether at the customer's finance department or by direct transfer, whether in cash or by check, etc. All should be defined in the form of an agreement to provide written or legal evidence for future payment collection. Of course, in specific operations, there will also be "defaulters." In such cases, when settlement is really difficult and the amount is relatively large, it may be necessary to use legal weapons to protect one's interests. In short, as distributors, when facing payment collection difficulties, they should not complain or retreat, but actively face them and boldly think of solutions and strategies. As long as distributors are attentive, solving payment collection problems is not too difficult, after all, distributors are the rights holders and the sovereign party. Source: Cui Zisan Marketing Vision From October 23-24, during the Autumn Sugar and Wine Fair, the "2018 FMCG City Distribution Logistics Conference" hosted by New Distribution will be held. At that time, we will invite industry big names, FMCG warehousing and distribution experts, and distributors who have transformed to unified warehousing and distribution platforms to discuss and answer questions about the future development trends of FMCG city distribution logistics and practical cases of distributor transformation to unified warehousing and distribution, hoping to bring you different inspiration and thinking! -END-