Collections for California Distributors and Material Suppliers

“Ask First, Get Paid First”

The other day, I was having a conversation with our CEO, and he shared an insight that really stuck with me.

He noted, “It’s funny that companies hold on to their receivables for so long, given that most banks charge off delinquent loans after 90 days.”

His point was that even in the banking industry, 90 days is used as a critical risk and escalation marker. He went on to add, “If you ask first, you are more likely to get paid first.” After more than 40 years as a Sonoma County collection agency, Tavelli Co. has watched that principle hold true across almost every type of commercial account.

Warning Signs Suppliers Tend to Miss

As we reviewed several commercial legal accounts that were working their way through the pipeline, he highlighted how often companies fail to realize that a business partner is in financial trouble, or even on the brink of bankruptcy.

Once a business partner mounts 10, 20, or 30 creditors, only a handful may ever see a payment. The rest are often left with nothing as assets get diluted, leaving companies to wonder what went wrong and why they didn’t act sooner.

How Account Age Shapes Collection Results

Across many different scenarios (whether reviewing updates, analyzing statistics and charts, or speaking with long-time clients), I look at the age of accounts sent to collections and am consistently shocked by how influential that single decision is.

Having a dedicated staff member manage this one metric can significantly mitigate losses.

Too often, however, receivables departments learn this lesson the hard way. Whether measuring recovery percentage, skip tracing success, bankruptcy outcomes, or legal results, account age repeatedly determines a client’s success with Tavelli Co.

Perhaps that is why it forms such a core part of what we call “the Tavelli Way.”

The Psychology Behind Delayed Payments

Many new companies treat their receivables department similarly to someone storing the family fortune under a rotting mattress. In their minds, a promise to pay or an IOU is as good as cash. They secured the sale, achieved the win, and delivered the product or service.

However, what many fail to realize is that after a short time, the likelihood of receiving payment drops significantly. Just like lifting a mattress to find a rotting bill, understanding the psychology behind delayed payments makes this clear.

How Net 30 Terms Work

Generally, companies establish Net 30 terms, requiring buyers to pay the full invoice amount within 30 calendar days of the invoice date. This provides buyers sufficient time to process payments while ensuring sellers receive funds reasonably promptly. Given typical monthly business cycles, this structure works well.

However, if an invoice remains unpaid after a month, the likelihood of prompt payment decreases as time moves forward. Buyers naturally become less focused on past services or sales. Unless you eat the same meal every day, you likely do not remember what you ate for breakfast last week. Since the initial invoice date, the buyer has undoubtedly accumulated even more invoices.

Collections Built for Distributors and Suppliers

Another industry that pairs well with our Sonoma County collection agency and specific expertise is distribution and supply. Larger commercial businesses with consistent A/R and revenue cycles require the systems and insight that only a firm with decades of experience can provide.

A Century of Experience Behind the Name

While we have highlighted Robert Tavelli’s impressive resume in the past, including his tenure as CAC President and service on multiple boards, many people do not realize our company has existed for roughly 100 years, with 40+ of those years under current management.

A recent communication from a distribution sales professional noted, “I have worked with your company before and I was very happy with your program.” This feedback came from a wonderful client who recently transitioned to a new company while remaining in the same industry.

Collect Past-Due Invoices, Without Losing a Good Customer

One of the reasons Tavelli Co. has been a leader in the commercial, or B2B, space is actually refreshingly unique: our roots started out in the medical space.

Over the years, we have worked with some of California’s largest hospital and doctor networks.

This meant that most of our referrals came from companies amazed by how well we interacted with their medical patients. In one person’s words, we were “surprisingly human.”

From Medical Roots to Commercial Accounts

As our business model and book of business expanded into the commercial and consumer spaces decades ago, we were able to merge the care and kindness developed in the medical field with the understanding that our commercial clients also wanted their brands and good names protected.

We understood that a good name was worth more than treasure, and we wanted to be a part of our clients’ success and reputation. That’s why one of our mantras is:

“We want to protect the relationships you’ve built over the years, as carefully as the recovery.”

What to Include When Sending a Commercial Account to Collections

One of the main questions we are asked in the commercial space, especially when it involves lines of credit, is, “What should we include when sending accounts over to Tavelli Co.?” We typically look for:

• Signed contract
• Invoices
• Email communications
• Personal guarantees
• Credit documents
• Similar records

The most important thing for us as an agency is the ability to provide supporting documentation and validate the debt should the need arise or the account be disputed by the consumer.

Why Material Suppliers Get Stuck With Old Receivables

One of the main reasons material suppliers often get stuck with old receivables is that they lack a process for a designated staff member to regularly review their aging report. Consequently, issues are discovered late, and changes in payment patterns are not identified early.

How Balances End Up Hanging in Limbo

A supplier may have delivered an order, but questions regarding delivery, short payments, or an unexpected promise to pay can keep the balance hanging in limbo.

As mentioned above, escalating the situation can feel uncomfortable, and there may simply be no one responsible for owning the decisions that arise from the dispute process.

One More Industry for Good Measure – “The Glimmer of a Faltering Wine Industry”

One area where the “line of creditors” situation mentioned earlier frequently occurs is the wine industry. When visiting these businesses, vendors see beautiful acres of vineyards stretching as far as the eye can see, along with stunning buildings, tasting rooms, and grounds, making it hard to imagine that the company they are contracting with is struggling. In addition to this, companies in the wine industry are often exceptional marketers.

Why Vendors Reach Out to Us First

We are typically one of the first agencies businesses reach out to in these situations, largely due to our experience and proximity. As a long-established Sonoma County collection agency, Tavelli Co. understands these local industries from the inside and knows how quickly a creditor line can form.

Yet sadly, operators at many of these wine and vit companies often feel like they are rearranging deck chairs on the Titanic. These are usually solid, family-run operations that love Sonoma County and the patrons they serve, but declining wine sales have placed them in a difficult position.

When the Music Stops

To survive, many of these wineries are forced to shuffle payables. They must maintain their vineyards, move current inventory, and retain key vendors. However, many of those vendors may not realize they are entering a relationship that leaves them financially vulnerable.

As mentioned, there comes a point when the game of musical chairs ends. The music stops, and you hope not to be one of the 10, 20, or 30 creditors left waiting in line. You saw the beautiful scenery, but you never expected this outcome.

A Better Way to Manage Past-Due Receivables

The age of an account often decides how much of it you’ll recover. The sooner a past-due invoice gets attention, the better the outcome, both for your cash flow and for the customer relationship.

For over 40 years, Tavelli Co. has helped California distributors, suppliers, and commercial businesses collect the right way, with experienced representatives, transparent communication, and respect for the relationships you’ve built.

Request a quote online or call Tavelli Co. at (707) 509-5565 to start a conversation about your accounts.

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Tavelli Co., Inc. has over 40 years of unparalleled experience in the debt collection and receivables management industry. Our mission is to achieve the right balance between getting clients paid and being empathetic to debtor circumstances, through implementing innovative practices, hiring experienced people, and improving business decisions through analytics. We provide peace of mind to all involved by collecting money with no complaints. Tavelli Co., Inc. takes the time to carefully listen to your customers and share their feedback with you through meaningful data and transparent communication, so you have access to the information you need to make quality decisions and improve your processes in the future. Contact us today and let the debt collection experts at Tavelli Co., Inc. help you set your business up for success.

IMPORTANT: Information provided by Tavelli Co., Inc., any employees of Tavelli Co., Inc., or its subsidiaries is not intended as legal advice and may not be used as legal advice. It is not intended to be a full and exhaustive explanation of the law in any area, nor should it be used to replace the advice of your own legal counsel.