January 18, 2010

I guess it’s high time to write something new this year! Life seems to move along in predictable rhythyms. Weeds need killing. Trees need pruning. The occasional client hasn’t paid up and needs prodding. I don’t like that last part, and I don’t think anyone in business does. So today, I write about something I have never seen discussed online in a well-rounded manner. Which isn’t to say it isn’t there, but…..you know.

Small business operators (and I mean really small, as in “mom and pop”) know about, but rarely discuss, the realities of trying to get paid. Like many financial matters, it is seen as somewhat culturally impolite to discuss the elephant in the room. Most clients of most business pay up, or those businesses would be insolvent in short order.  But from what I’ve seen in my own endeavors, and in listening to my cohorts, there exists an entire class of persons in this world who make it their life’s work to avoid paying what they owe. This isn’t to say that every delinquent client falls into this category. Quite the contrary. There are those who are Forgetful. And those who find themselves in Financial Distress, and who will make good on their obligations as soon as they are able. Having been in the “forgetful” category myself on an occasion or two, I can’t “cast stones” there. Certainly, one hopes one never finds oneself in severe financial difficulty, as honorable people don’t like being debtors, on principle. But alas, there are more categories than that. Some feel that it is unimportant if someone is owed $100, how can they be bothered with such a pithy sum? Yet others know full well they are ripping someone off, and just don’t care. Maybe they feel that their economic status (whether that good, or that bad) makes it OK to shirk payment. Or maybe it’s worse than that, and they are miniature white collar thieves with little or no intention of ever parting with their cash now that they have the goods in hand…..the word now escalates to “fraud”. Yes, I’ll call it fraud when one enters into a transaction knowing fully well that the provider of goods or services is not going to see what is owed them, yet accepts those goods or services anyway. Over time I’ve pondered all the paths humanity has taken in noting these ancient problems, as I am certainly not the first person to have ever wanted payment.

By way of examples, some 700 years ago Dante wrote his allegorical “Inferno”, and assigned the Frauds to the Eighth Circle of Hell (that’s not good) in repudiation of their twisted violations of man’s gift of reason. Those folks knew better, but talked themselves into believing that their behavior was somehow just fine. Later on, in Victorian times, one could be thrown into a debtor’s prison if one owed. Imagine that, John Doe can’t pay for his box of produce so off to jail he goes until his family can pony up for the turnips. I myself favor a resurgence of public humiliation, complete with tarring and feathering. I’ll supply the feathers, and pine tar can be used for humanitarian reasons.

These unfortunate cases of “being owed” always take the same course. We used to have a sort of free-for-all payment system…we didn’t care if people paid in advance or in arrears, as long as we were paid. This approach was somewhat naive. One day, we found that we were owed close to two thousand dollars! Our attempt at a solution was to enact a policy requiring prepayment for our produce boxes. One extra box of produce would be delivered to accounts going into arrears, but after that, no more produce until paid up in advance. While that sounds good, it is difficult to do. Farming is hard. Lots of work, lots to think about, and it’s easy to forget to check all the accounts prior to each week’s packing activity. (Or maybe, to be brutally honest, I don’t want to spend what little free time I have on this activity, even though I know I’m going to have to just do it if I want problems to stop.) If someone is in arrears, the time has to be taken to write a letter asking about the amount owing. I’m not an accountant by any means and sometimes the person doesn’t owe at all, I made a mistake. But if they do owe, there has to be some communication about how and when payment will be made. Most of the time this goes well, but sometimes not. The first letter is always nice. I try hard to give others the benefit of the doubt. If I receive no response, the second email is much more blunt. My fond term for these missives is “nastygram”. I don’t like to be direct, but what the recipients don’t realize is that I am overcome by waves of “Oh NO here we go again” and feel the need to be firmer than usual. I have also noticed that all payment problems are preceded by non-communication. Nothing arouses my concerns faster than someone who won’t respond to correspondence or who gives the appearance of avoidance. Another problem is that if our policy is strictly adhered to, it may cost us income. We usually need the income from all the boxes we sell each week. To not send a box on account of not connecting with someone who owes, and thus missing the income….ouch. So it becomes a gamble….do we think the person will pay? How much into debt can we allow someone to go before the risk of nonpayment becomes too high? And what if a longtime client is a little behind on payment, does one adhere to the exact rules, or is it better to be flexible in order to show goodwill? At what point in being a customer is a client entitled to more lenient and favorable treatment? After all, our clients are who we work for, and no one decent businessperson wants to offend someone else needlessly. Even more awkwardly, some of our clients are our friends, relations, or business contacts. How does one best cope with that? While it’s easy to say that “business and friendship should be kept separate”, sometimes the other party hasn’t heard that one.

So as noted, I have sometimes failed to keep up on accounts, which is when problems begin. (Although with each additional occurrence of being taken advantage of, I become a little more organized and defensive.) It can happen very quickly that someone owes $50 or $100, or more. This may be peanuts to many businesses, but those peanuts are what keeps us running at this farm. $50 is two fruit trees or 5 bags of poultry food or whatever else may be needed to function and grow. And then there is the really dreaded event: someone is in arrears, who notifies us that they are quitting the CSA program. They are told how much they owe, they may or may not promise to pay, and either way the check isn’t in the mail. Now it becomes much harder. We have had instances where I’ve nagged and emailed and made phone calls (and even had Ken make phone calls) and sent snail mail letters, and eventually received payment in full. Other times we’ve received partial payment and written off the rest, because if it was that difficult to get some of it, it will be impossible to get all of it. In yet other instances we’ve been stiffed completely, which left a complete feeling of disgust and betrayal. I often wonder what the other party is thinking, if they think this is funny, or if they feel bad about it (but not bad enough to do something), or if they are so oblivious to others’ feelings that it doesn’t even rate. I am convinced that defrauding a very small business is one of the most complete shows of  selfishness and lack of empathy possible. It only takes one or two of these events per year to make a business owner feel bad about humanity. And, there is an option available to large businesses of which we really can’t avail ourselves….the collections agency. It costs more money to use those services than the money we are owed. There is a part of me that would SO love to sick and agency on persons who have run out on their obligations and take pokes at their credit ratings, but, we don’t have the means (and I think the offending parties know that quite well).

So obviously I need to take the reins, run a/r reports weekly, and spend my time hounding people for payment……but that isn’t why I became a farmer. I became a farmer to grow good food and support a community of people for whom quality food and discovery of better eating really matters. And I think for the most part, that occurs. It’s just sad that a few proverbial bad potatoes always occupy the bottom of the proverbial sack. I’ll close this by mentioning one other thing…most clients pay in full, on time every month, and we never even talk about accounts. Yet other clients prepay quarterly, like clockwork, and we really never talk about accounts. And some people stop their membership in our CSA with money owing back to them. When I offer to send them a check for their balance, they tell me to keep it as a donation because they are so happy that we are here, doing what we do. It’s all these people that I choose to think of the most, and it’s people like them for whom we’re farming.