That story about a woman who returned a Christmas tree to Costco on Jan. 4 “because it [was] dead” – and got a full refund – sure got people talking.
Costco gave the woman a refund after questioning her, verifying the purchase on her account, and shaming her “to a small degree,” Fortune reported. This seems to me a little bit like getting a refund on the dozen roses you gave your wife for Valentine’s Day on, say, Feb. 28.
People who heard about the dead Christmas tree return vented on social media about how cheap some folks are.
Yet this type of behavior exists because companies allow some customers to take advantage of them.
People have reportedly gotten refunds for dead plants, old mattresses, empty wine bottles, and personal photos. Costco is not alone – chain restaurants have long been taken advantage of by customers for food that is not “right” and long before Walmart sold tires, the retail giant once gave a refund for tires.
So why do some businesses allow these questionable refunds?
Big retailers with lenient return policies may just write this off as part of doing business. Sometimes the line between what constitutes a legitimate return, and a questionable one, is blurry (not so much with old roses and Christmas trees!). Companies may decide to eat the product cost and issue a refund to maintain goodwill with the customer.
For a small business, though, it’s also important to understand that your customer may not be that fool in Costco, but rather, a long-time buyer who is simply taking too long to pay an outstanding invoice. It’s imperative that you, as an operator, understand how far “out” your accounts receivables are and take steps to make sure that your invoices are being paid in a timely fashion.
It’s very important on the income side of the ledger not let your customers delay paying you too long. If you allow too many customers or clients to stretch you out too far, it will begin to put a serious crimp in your cash flow.
On the other hand, we all want to keep our customers happy. And having the “where’s the money?” conversation is not usually comfortable for anyone. How can you handle it? Well, a simple email reminder may be all that is necessary – bills actually do get lost from time to time. On the other hand, if you are dealing with a longtime customer and have a relationship with them, then you should never be afraid to pick up the phone and simply ask them about it.
After all, you creditors would, wouldn’t they?
Never, ever, say “no” for the other guy!
If you or your clients have any tax issues or problems with the IRS/State or other federal tax problems, please feel free to contact me directly at (909) 570-1103 or by email at Carlos@HealthcareTaxadvisor.com
Carlos Samaniego, EA
Enrolled Agent
Licensed by The Department of Treasury to represent taxpayers
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