Wake up, Buy Here, Pay Here people. It's a beautiful day. Go grab yourself another cup of Joe and say hello to Jim and Michelle Rhodes on the Buy Here, Pay Here morning show. Take it away, you two. Happy Wednesday. Welcome, everyone. Yeah. Yeah, I just as I was waiting for the intro stuff, I was doing math. in my head. I know, right? Two weeks until Christmas. Yeah. Fourteen days. It's true. Yeah, I did that math this morning when I was thinking about our podcast. It's two weeks from today, the holiday itself, so thinking about that in the context of collections. Yeah. Are you awake? Yeah. Yeah, I'm trying to wake up. Yeah, me too. Yeah, I'm feeling a little bit groggy this morning. Yeah, had a hard time sleeping. Oh, yeah? You know. Well, and Jib's like, he put his eye mask on because I had the lights on because I was still scrolling on. She comes to bed. She brings Facebook to bed, and I'm like, I'm trying to sleep over here. I know. And actually, I keep threatening Facebook, not Jim, that I'm going to go on a social media fast. And then they keep sending me really great stuff to look at. My thing is, one of these days, I've determined I'm going to go past the reels. You know how they put the reels in the middle of your feed? But that's the stuff that I really enjoy. And we all know social media is just one big, huge algorithm. and my algorithm because it really is it's on what you want to watch is what you see the most of so if you like doom and gloom you're seeing that an awful lot if you like you know whatever what I see is ancient egyptian history and things like that is I'm just like so I just enjoy that so much so I'm always seeing a lot of stuff like lots of gadgets and tools and it's because it's christmas too and they know you're a dude and you still haven't even click like on one of them and there you go here comes the flood of the stuff so yeah speaking about christmas not have we okay I I managed to put together cookie things for neighbors that got finished yesterday so um but not a not a Not a gift under the tree. I haven't even started. I ate all those cookies. Did you eat them all last night? Oh, that's where you disappeared to in the middle of the night. Right on. So, do we have any announcements before we get... No. No, our VH schedule, of course. I'll just remind everybody, we did set the date for our... first white hat certification course, that will be an invitation only event. We're going to kind of handpick our, our candidates for that one. And we've already started. It will be here. Here in Utah. Yeah, we're bringing them to Augur, Utah. Oh, I wanted to show and tell. Again. Dear Santa, please stop judging me. Yeah. Our fun holiday mugs. Our fun Christmas mugs, yeah. So, yeah, we've got V-Eight, and again, the pricing is going to be going up the first of the year. I didn't tell you anything about V-Eight. I was talking about the certifications. Oh, the certification course. Sorry. Yes. I really am. I really am not quite. I'm not quite a hundred percent there. So certification course and V-Eight pricing going up. So yeah. Today's topic is something we've kind of touched on at different times, but it's really timely for this time of the year. And we recognize that a lot of our A lot of our listeners, I mean, we have a lot of listeners that are seasoned, have been in the business for a long time. They're usually the ones that we enjoy getting the most feedback and comments and all of that from. But this is something we recognize that we have a lot of listeners that are um newer in the business and um and so we just kind of wanted to talk about something that is what happens and how to handle it in a white hat way Yeah, and I think this one's especially important. You know, as we often find, there are certain subjects that kind of go to the heart of the philosophy that sort of separates a white hat dealer from a non-white hat dealer. I don't have to call him a black hat dealer, but it's just somebody who's not necessarily following a white hat philosophy. So maybe to talk about this, we back up, you know, back in October, we did a broadcast about proactivity in collections. So we would have been anticipating that we would be proactively communicating with customers leading into the holidays so that we would avoid finding ourselves with a long delinquency list right before Christmas or right after Christmas, trying to manage that in advance or at least have understandings in place. I completely understand. Those of you who have been in the business for a long time know this happens in the Christmas season because a lot of our customers can barely make a car payment work they're struggling um on on a regular month sure this is not a regular month this is oh my goodness it's christmas and you know there's a lot of stuff that's happening this time of the year yeah so so those are stressors right I mean people know that the holidays are um you know can be a stressful period for many certainly financially especially for those who are at the lower income segment, right? That's a struggle already. And so now you add the pressures of Christmas and children and all the stuff that goes along with that, then it's natural to expect that we're going to have stresses. And I would say for those people who get into the buy here, pay your business, they're bound to recognize that. They're bound to know that that's going to be a thing. So I think you want to develop a strategy. And I think you first have to just, all those things, I always talk about policies and procedures have to kind of come through your philosophy. You have to first decide on a philosophy, right? And so this is why I think this is an important subject to really think about. And it's times like these that we really start to differentiate. And so it's kind of how would a white hat dealer decide handle collection well exactly I I pulled up whitehatway.com um those of you who have not had a chance to visit there uh uh one word whitehatway.com and it has in there the um Code of Honor, basically what our Appendix W is that we attach to every contract. And so, you know, the main foundational piece to how we handle repos, people behind... is this is your why, this is your culture, this is the White Hat Way culture. And so if White Hat Way is something that you have adopted in your dealership or you're looking at what are ways to do this so that it really is It's a brand and it really is a way that is about being fair and all of those kind of things. And so, you know, I was just looking at this and it's like, you know, honesty, transparency, fairness, kindness, empathy, compassion, generosity, goodwill, honor, discipline, humility, consistency, integrity, and leadership and communication. Yeah. Oh, trust. Sorry. Yes, trust. And there's some others that I didn't add as I was going through. But, you know, first and foremost, whatever you do... that it's, it's, you know, once, once a dealership has like, these are our guiding principles, whatever they are, I mean, they, they, they can be the white hat way code of honor. They can be whatever it is, is that your team, all of their actions and decisions go through this filter. Yeah. Yeah, for sure. And I think right now we're at crunch time. I mean, two weeks in, you know, you got people getting paid, you know, biweekly is a big, is a common pay schedule. So, you know, we're fourteen days out. So they're going to be, you know, one more paycheck probably in between now and Christmas, if that. So I think the reason I was kind of zeroing in on trust on your Appendix W is because Going back again to the we urge dealers in a white hat context, you would be proactive about collections. The other thing that would be happening is we would have some level of trust established with the customer already. So that's important now because in the context of them answering our phone calls, because we put the poll out this morning and I jotted down the results. We just barely got it out about three hours ago. But basically the results that are coming in, we asked, the poll basically asked, Let me just find it, make sure I get the language exactly right. So I can say, so the poll said in the last seven days, what percentage of your past due customers are answering phone calls? And the option one was one hundred percent. Of course, nobody said that one. The next one was more than half. The next segment was maybe twenty five to fifty percent and then less than twenty five percent. As of airtime, we don't have any answers at less than twenty five percent. Everybody's in those other two buckets and we were not at one hundred percent. Right. Forty two percent said twenty five to fifty percent and fifty seven percent said more than half are answering the phone. So you could that's a small sample, but it's basically the idea here is if they're answering our phone calls, because we can work through, and you've heard me say this, I feel like if I'm the dealer, I'm the collector, I'm talking to the customer, I'm going to say there's, and even if the words don't come out of my mouth, My approach is there's not going to be anything that comes up that we can't work out together when we're communicating. Let me know what's going on. I'm empathetic to your situation. I'm going to work with you. And so, and I'm bringing a tenure approach to every interaction and every situation. Yeah. Collect the cash, not the car. Brent Carmichael. Yeah. Yeah. And that doesn't, that's not to say demand the cash today. Yeah. Yes. Okay. So, so that's basically, we don't, we don't have to demand the money today, but what I, what people will find with in a white hat philosophy and strategy is I'm going to press pretty hard to hold the accountable to an understanding. And I, I prefer to see that understanding being in writing. Okay. So you can use technology in all kinds of ways to firm up understanding. Yes. And there's, you know, a lot of reason behind that. That's something that all of our clients, anyone, this is what we teach on the podcast too, is that understandings, it's, we strongly advise you not to use verbal understandings. And, you know, there's a, there's a A zillion reasons why, because verbal understanding is he said, she said, a misunderstanding. I mean, it can be like a miscommunication. You thought you were communicating something. They heard something different. But when it's on paper that says this is, you know, you're going to do this and we're going to do this and we're going to do this. It is something that is, there's, when you talk about communication and honesty, it's like, it's very, and transparency, it's very transparent. This is the understanding. And we were talking this morning about what kind of understandings that we would encourage dealers to make. And one of the things, you know, it's like we talked about partial payments and, you know, that's not ideal. No, but it keeps someone in, um, in the car and, you know, being able to come up with, with new. Yeah. And listen, people have their reasons. That's another poll. I don't recall if we've ever done that one specifically, but certainly there are dealers out there who say we don't do partial payments period. You either pay the full payment or nothing at all. We don't accept a partial payment. My problem with that is that when you've got a customer who's in a tight spot managing bills and what have you, it's been my experience that if they if they can make a partial payment, that's just, let's say they owe three hundred on a biweekly or something and they, they can pay a hundred of it. That's a hundred they don't have to come up with out of the next paycheck. So it's just, I find that when a customer in our segment, and this can be true of other segments too, but you dig yourself a bit of a hole and the deeper the hole, then the harder it takes, the longer it takes to get out of there. And so we, We think a partial payment is appropriate. Everybody can have their own philosophy about that. We would be encouraging people to work with a partial payment. So, you know, partial payment, let's say your payment's two hundred dollars and you can pay a hundred dollars. What would you advise, you know, if everyone out there is one of our clients, what would you advise? Because we don't do partial payments typically. It's what we don't encourage to do a partial payment without an understanding of how the rest of it is coming in. And like what those parameters are, what would you what would you tell someone? I would be listening. In other words, I'm not I can't tell them what to prescribe because that's something you've heard in past training where when we dictate to the customer, you need to pay this, this and this on these dates, then they're going to agree to it, even if they haven't taken the time to think about when their rent is due and all those things. So basically what I have to do is I have to be a problem solver and I have to be a listener. I have to understand what's going on. Judgmental and just more curious. Um, yeah, but it's just about being, it's about, I have to investigate. I have to inquire to basically understand what's going on. And I, I sometimes, again, I'm thinking tenure approach. So if this customer needs, so in your example, the customer was a hundred dollars short this week. Well, again, I'm just aware that right behind Christmas, somewhere around the first of January, a lot of our customers are going to have rent coming due. And so if I need to spread that delinquent part over multiple weeks, multiple paychecks, then I would be prepared to do that. So why does that matter? Because when we take that ten-year approach, the difference between that customer paying that hundred dollars over let's I'll exaggerate a little bit. Let's say it's over three or four biweekly pay periods, and they're going to do twenty five extra over five for pay periods. Well, that means the customer is going to sit on my past due list for a period of time, which is how does that unless I have a borrowing-based problem, I have a line of credit, and my contract's going to become ineligible because I cross over some stage of delinquency, then that's not a huge deal to me to spread it over for pay periods. I'm exaggerating a little bit, but it's whatever it takes to make sure that the customer can be successful. Because what I want to do, and I want to kind of refer back to, you know, our friend Bill Elizondo wrote an article. Yeah, great article, this. Yeah, on accountability issues. versus empathy. And so, you know, you and I talk a lot about in this whole context of empathy and dealers have a business to run. They have to be able to hold the customer accountable. So you can do both is what I'm hearing. You can do both because what you're hearing me say is I'm not demanding the payment. I'm not demanding the money. I'm not even demanding the money on the next paycheck. I'm simply saying, let's reach an understanding. What I am, if there's an accountability in the approach that I'm bringing, it's the accountability to an understanding. And so, as you know, I always say one understanding can be replaced by a new one if it became necessary, especially if the customer comes before it ever comes due and works with me. I'm going to work with people. And life is life and it's full of curveballs. And so I just think you have to be prepared to adapt. and you hold the customer accountable to whatever those understandings are so so that means I have to be careful to draft an understanding reach an agreement with a customer that is something they can manage why because I want to hold them accountable to that understanding it's not it's not about dollars it's about following through on whatever so if I spread the dollars and I reach a new understanding through a payment agreement, payment arrangement, all kind of different labels for that and different systems and approaches. But I'm just basically going to grant some time. Now, I'm not going to modify the contract. I'm not going to defer the payment on things. So that's something kind of specifically that we could dig into. But Essentially, I'm not going to modify a contract until I'm just out of options. So that's a whole different subject. We can probably take that on at some point because we know that certainly with lines of credit, there's different names for that. There would be a rewrite, sometimes called a contract modification. In some cases, you might even consider a payment deferral. In some systems, you can do a due date change and you just move the payment to the end or whatever. So all those things are things I'm trying to avoid. I'm trying to keep the contractual payments as they are I'm going to reach an understanding I'm going to document that understanding we have a customer signature and then and if it takes a little time for the customer to catch up it takes a little time but I'm really just thinking this is the holidays I'm not surprised customers are going to struggle I hope I've been proactive in reaching out to them and reaching these understandings going into the holidays because that provides relief for them too we have the relief of knowing that we have you know, when the day after Christmas hits or, you know, we hit the twenty seventh, which will be the first Friday after Christmas, then I'm not going to be surprised if my past due list grows. But I also hope that if I'm the dealer, I'm seeing that my collection supervisor and the team have put together written understanding. So we have understandings in place with these customers. And I don't have to worry that, you know, the business is going to collapse because, you know, the customers can't pay. So it's just a matter of It relieves stress for everybody when we reach out and we're proactive, we reach understanding. Now, in this case, we're two weeks out from Christmas. We still have time to be proactive and reach out to people, especially before they're very far past due. My question on that poll this morning was very specific about when the customer is already past due because we know they're more likely to answer the phone when they know they're current. They figure it's not about the car payment. but when they get past due and they're not ready to talk to us because they don't have an answer then they're not as likely to answer the phone and so I think we we just have to as you and I talked about I don't phone is preferred if I can get on the phone with them quickly and have a conversation reach understanding and then get a signature then that's fine but we're talking about texting this morning and then video and and Yeah. It's like if, if it, as we were ranking the way that we would prefer to communicate with them first is face to face. Second is telephone. Third is like a video text. So they see a face, they see the, you know, Whatever, the empathy, the concern, all of those things. And then last is texting. And you can throw email in there where you do a video text or a video something. But it's the important part where everything is so compressed. For a lot of people, it can be a difficult time of the year. Right. is that you make yourself as human as possible to your customers. It's just you and absolutely approachable. And this is one of those known, liked and trusted kind of things. This is a long game thing. And And if you've been working throughout the year to develop those things, then you already have the equity to have them pick up the phone or all those things. But it's these things. It's how do you approach having the conversations with them and what kind of equity. I was thinking as you were talking about your approach is that You know, we're always talking long game. We're always talking long game. We're always talking long game. And the long game is, you know, a customer that you're going to have for ten plus years, which most people know, you know, your contracts are not ten years. That's a couple or whatever. And that, you know, right now is a good example about how, as you develop these known, liked, and trusted, as you develop different programs within your dealership, then your customers at these kind of crunch times, they also have extra tools potentially that they can use, you know, the collectors and the customers. So you know, one of the things that we've talked about is, is, you know, how do you how do you? How do you reward good behavior. And that really is. I mean, everyone appreciates getting rewarded for some good behavior. And good behavior in our industry is making your payments on time. And so one of the things that we've talked about, if you're looking right now, You know, we're asking that you communicate, try to develop trust, be as human and as personal as possible. But if we're looking towards the long game, come up with ways that you are rewarding good behavior. And one of those things that we've talked about is, you know, It can be supplying Christmas dinner or, you know, because that's a financial ease and easing a financial thing. Or that if you make, you know, six or eight payments on time, you get a voucher for twenty five dollars or fifty. Sure. That you can use any time that you want to through no more than X amount of vouchers at one time so that they have something in their bank that as something comes along and it could be their last payment. Or if you've done something where they've done a great thing and you have this voucher for the last payment, You also have that as a tool. And it's like, okay, we're crunch time. We want to keep you in the car. You know, we have this thing that's sitting there at the end. What if we accelerated and using it for today? And then you don't have it at the end of the thing anymore, but we could use it for today. That's great. I love those kind of things. I think anything that could be a solution that allows us to, because I think the other thing here is that we kind of need to have a financial strategy going into Christmas. We can anticipate that our bank deposits could be less. I can say last year, our clients, I remember December was quite strong. They collected quite well last year. But I think what we could do is be prepared for financial adjustment that we're going to be a little deficient on payments in December potentially. And allow that kind of flexibility in vouchers and whatever you're doing. I think there's one important element that I want to make sure we cover here. Because I think in this context of trust, you and I talk a lot about trust deposits. And so it goes both ways, of course. Does the customer trust? does the customer trust us? And does the customer feel like they have made enough trust deposits? Have they established enough good faith with us that they feel like that the dealer will work with them? So this is important because I think that for us to think about if I'm at the customer and you're the dealer, Michelle, do I trust right now at Christmas time, if I call you back, are you going to work for me, work with me? Or are you going to just be looking for my address or you can come and repossess my car? Like what is the nature of our relationship? Do I trust you? And so I think we have to ask ourselves anytime the customer is not responding to us, if they're hiding from us, let's, let's always look at ourselves first. I always take, take the same approach and underwriting and all these kinds of things. We, we'd, ought to develop as good leaders and good business people. We ought to develop the habit of looking at ourselves first. Is there something we could have, should have done differently here and ask ourselves, why is the customer not talking to us? Do they not trust us? And if so, have we not earned that trust? And is there something more that we could be doing to assure them? Because again, if I'm a white hat dealer, I'm not looking to repossess the customer's car on Christmas morning. Oh, yeah. Right? Yeah. Yeah, but the customer should know that. And trust is not being a pushover. No, it's a different thing. Trust is that they also can trust that you're going to be good on your word. And if you say, hey, this is what I need from you, and if you're not willing to do that, then, I mean, please don't make me come and get the car, but I will. I mean, if I have to, but please don't make me come. That's like, that's one thing I love. Tommy Brandes is like, please don't make me repo you. It's because he comes at the attitude. It's like, you are the one that completely holds that lever in your control. Don't make me do this, but you know, I will if I have to. Yeah. Yeah. But I also think in addition to that, you can say back to kind of Bill's thing in his article about accountability. It's like there's nothing that Michelle and I have talked about today that would suggest that we don't believe the customer should be held accountable. It's just that what are we holding them accountable to? In my mind, it's holding them accountable to some level of communication, reaching understandings, ideally in writing. And, and so there's, there's, it's not so much about money. We, we want to have them pay what they can pay now to avoid digging too deep of a hole. And so we're going to ask them, I saw some of the comments that came in on the poll were of that nature where they have a phrasing of, you know, how much of what you, of your current payment can you pay today, which I think is an appropriate approach. Find out what they can do and, and they just go from there. But I think it's, again, it's about just, do we have money? that kind of relationship with the customer, because if you do, and you have this sort of tenure approach, then you're going to, this is just a temporary setback. This thing will be past Christmas in a few weeks. And, and, and certainly by most of our dealers see that getting recovered in early January, So, you know, you can imagine there are dealers out there that sort of hope the customer gets past due so they can come up with a reason to yank the car. It's like, that's, that's so short sighted. Yeah. Well, and it's also, it's also not, um, not a trustworthy business in, in their community. You talk about being a compliance target. I mean, when you have that sort of approach, this is where... They're waiting. Let them miss a payment. I get the car back and I can start the whole thing over again. Because that's good for me financially. That's good for me, the dealer, financially. It's very thin ice walking on. It's not what we would teach and it's not what we recommend. And we just think if you're playing a long game and you're really bringing that sort of approach, you wouldn't do that. And we know, you know, we talk to just amazing dealers every day that are, they're all about this. They're all about what White Hat Way stands for. They may not be White Hat Way certified dealers, but they are, they are White Hat Way dealers that they, you know, they really do develop relationships with their, with their customer base and, you know, have this tenure approach and, and and are creative in how they can problem solve and those kind of things. And so hats off to you, all of you dealers out there that practice their business in a white hat way that fit within that bucket. um and this you know the conversation more today was uh was really aimed at dealers that are like I don't know what to do this is the you know I don't know what to do this is this is a problem um and you know to try to give some ideas and some nudges and some it's going to be okay and and let's start planning for next year absolutely that's exactly where my mind was right now we're fourteen days out from christmas it's a great time for you to document what's going on make sure and track it meet with your team before and after the holidays and find out what could be done differently. Because I think when we did our conversation around proactivity back in October, I remember the thoughts were the same for me. It's like my wishes would be for the dealer, their team, and their customers to have a peaceful and stress-free holiday, right? And this is part of how you get there is you have clear communication. You've built up trust deposits already. You have understanding in place before the holidays ever comes. Customers are able to enjoy the holidays and not worry about, you know, they've got some written understanding. And so, wow, the emotion. It's like it's, this is so easily achieved. It absolutely is. And just, you know, for those of you who are listening to is, you know, we, we're watching, this is going to sound like a squirrel, but it really, really relates. We're watching what's happening in, in economy and how people are, um, you know, what's there's, there's going to be a piper to be paid with a lot of people, um, in, in our communities. Um, That we're going to see in the next coming years, potentially, an influx of people that are not used to the world that we live in. And those are, honestly, those are your perfect customers. Sometimes they have to be, it takes a little period of adjustment. Yes. I mean, but it's like they have fallen off the credit merry-go-round for whatever the reason is and that they want back on. And so you are their pathway to getting back on a merry-go-round – yeah, credit merry-go-round. Mm-hmm. So let's work together and listen to the podcast. We've always got a lot of different ideas on how you can become known, liked, and trusted in your community and be that soft place for people to land. The soft-er, because it's a hard fall. And, you know, and even our, just our regular customers, they fall all the time as well. And, um, and it may not be, they've been off the credit merry-go-round their entire lives in some cases, but be that place that you can go and, and, um, you know, help people achieve better. Sure. They can be better. One quick specific thought before we wrap up. I think, um, if I'm sitting here today's the December the, uh, eleventh, so we got Friday the thirteenth. It's Friday the thirteenth For those customers that are paying this week I would be talking to them This is part of what is important to do When they pay on Friday I would be asking them Hey, first of all, it'd be rewarding them. Hey, thanks for, you know, making the effort to get this payment in on time. I know it's Christmas and that can't be easy. So can I ask you quickly, like, are you expecting a full paycheck on the twenty seventh? Is there anything that we need to do? Again, opportunity to be proactive. Absolutely. You got a paycheck coming biweekly on the twenty seventh. That's two days after Christmas. Are you are you working full hours? Do we need to make some sort of arrangements? I mean, I'm just basically trying to trying to learn from the customer while I have them. Yeah. is you know what do we need to do I'm mindful two days after christmas where you act because you may have missed some days some people don't pay for the you know they don't earn paid holidays what have you it's just let's have the conversations talk to them and and they'll hear in my voice that I want to I want to avoid a problem we don't we let's reach an understanding now whatever has to happen let's let's be proactive and let's let's figure it out so that we don't nobody has to be chasing anybody Yeah, absolutely. Yeah, just there's so many different episodes that we've talked about ways of dealing with people getting behind on payments and through White Hat Way, which is, you know, usually when we have that conversation, it's through the context of White Hat Way. um you know we like I said thank you dealers those out there that are really doing good and really trying to support their customers thank you thank you thank you thank you thank you and those of you who are facing this for the first time you know take a look see what you can do to to shift and adjust have a conversation with your team because this is a stressful time and go out there and have a fantastic holiday season and you know do what you can to collect those collect those payments right All right. Have a great day and we will see you on Friday the thirteenth. All right, everybody. Thanks so much.
