Glenn Miller
Owner, Miller Wholesale Lumber, Tempe, Ariz.
With nearly $350 million worth of construction liens in the metro Phoenix, Ariz., market in the last 30 months, Glenn Miller at Miller Wholesale has been forced to get tough. The company has taken a number of preventive measures to avoid collection altogether.
“We started denying credit as a collection tool and making the smaller guy that didn’t deserve any credit pay cash,” Miller says. As a result, Miller’s cash sales and cash flow have increased 25% in terms of total percentage of sales in the last two years.
“We don’t give credit as a convenience. We only give it when it’s the right situation,” says Miller.
The company has also created a wraparound agreement for all four parties involved in the process: the supplier, the builder, the subcontractor, and the homeowner. At Miller Wholesale, all parties must sign the agreement before materials are delivered. “It’s court tested and it puts everyone on the same page,” according to Miller. “Without a third-party agreement, you don’t have a leg to stand on.”
Miller has been burned in the past by contractors who have forged and signed their name to checks payable to Miller, cashed them, and split town without paying Miller Wholesale a cent.
“We set up every job on its own two feet and if you can’t cut the mustard, we say ‘no, can’t do it,'” Miller explains. “I’m only as good, and the company is only as good, as the next order you give us.”
Miller has gone so far as to have bank accounts frozen in cases of fraud, thanks to the wraparound agreement. “During desperate times, people do desperate things, and they take desperate measures,” he says.
But the wraparound agreement has proven to have firepower. In a recent situation where a homeowner ordered $40,000 worth of lumber from Miller, had yet to pay for it, and was about to declare bankruptcy, Miller sued the homeowner and was awarded a judgment. The company is now getting paid every two weeks by the homeowner.
“You have to have a good contract,” Miller says. “You have to dot your I’s and cross your T’s and you have to be vigilant, because if you’re soft on credit, you’re going to get beat.”
