PAYING REPS ON TIME: It could mean the difference in success or failure

When times are tough (and even when they are not) some manufacturers begin paying rep commissions slowly. They feel that the reps aren’t going anywhere so, unlike the electric company or the phone bill, they can forgo paying reps until their cash flow is better.

Bad idea! When times are bad a manufacturer needs its reps and their enthusiasm more than ever. Here are just two reasons why:

·        Reps are going to either stop or slow down their selling. Simply put, they are not going to sell hard (or at all) if they don’t think they are going to be paid.    They are going to, by necessity; put their time and energy where they can make money. 

·        Customers will lose confidence in the manufacturer’s ability to ship them.  If a manufacturer is not paying its reps on time its entire financial position comes into question. Reps don’t want their top customer looking askance at them because that planogram they were supposed to fill never shipped. Buyers can smell ambivalence so, if reps are not confident about the solvency of their manufacturer, buyers will get the message and will either not buy or cut back.

At this point, some manufacturers reading this are saying to themselves:

“Not my reps!”  

“They are totally loyal!” 

“They fully understand why I can’t pay them right now.” 

“They are part of the team.”

This is an illusion that may come from the reps’ affable natures (they have to be affable to do the job). Manufacturers may mistake a rep’s easy going manner for being easy. 

Simply put, the minute reps stop getting paid or start getting paid late they no longer feel part of the team. They no longer feel loyalty to the manufacturer because they manufacturer is no longer showing loyalty to them. Particularly if some reps are getting paid and others are not (they know because they talk among themselves.)

So, when times get tough, manufacturers need to find a way to take care of their reps. Simply put, they need them out there selling harder than ever. It could mean the difference between a company’s success or failure.