What should I ask about a tire shop’s fleet customers’ payment terms?

Ask for the receivables aging report and a list of fleet accounts. You want to see each customer’s balance, terms and how often they pay on time. One large account that routinely pays late can strain a small shop more than several small ones. Ask also about seasonal swings. Fleets may order large changeovers all at once, which means a big invoice arrives at the same time as the supplier bill. See how the shop handled those periods in the past.

Ask how those terms were set. Are they in writing, or an old understanding with the owner? Find out whether anyone has asked for changes, and whether the shop has ever stopped serving a customer for non-payment.

Think about your own cash. If you will buy tires and pay suppliers sooner than fleets pay you, you need working funds to cover the gap. Ask your accountant to model what that gap looks like and how it affects the financing you plan to use. Ask the lawyer how the sale agreement should treat balances owed before closing, and who collects them. Meeting the larger fleets with the seller’s agreement can also tell you how they see the shop.

Key takeaways

• Review the aging report and each fleet customer’s record of paying on time.
• Find out whether the terms are written or only understood.
• Plan the working cash you will need to bridge slow payments.