CHICAGO — While cleaning for individual customers is usually the most profitable thing for the business, some dry cleaners are finding that doing bulk work for other businesses can help them ride out periods when customers aren’t coming through the front door. 

In Part 1 of this series, we explored how and why cleaners might find corporate clients and ensure they’re the right fit for the business. Today, we’ll continue by examining what a cleaner might expect, how they should establish pricing and payment terms and the practical issues that come along with this type of work. 

The onboarding conversation is where commercial relationships can either start strong or go sideways.

“Onboarding is important,” says Nick Gausling, chief operating and financial officer at Al Phillips Cleaners in Las Vegas. “We have a very structured approach. We do an operational walk-through. We gather as much data and detail up front as possible, including what type of items they are sending for pickup and delivery, all the way down to pricing.”

Will Waterstraat, CEO of Helena’s Dry Cleaning & Laundry in Seattle, offers tiered service options and free test runs before any contract is signed. 

“Our experience in guiding you through the onboarding and really setting expectations is a very big deal,” he says. “You’re going to avoid a lot of problems by making sure you let them know what they’re going to get.” 

Almost every account now signs a contract, Waterstraat says, and quality complaints get checked against it: “We will go back and review the contract. We’re very clear about it.”

Tom Fox, owner of Martini Dry Cleaners in Burien, Washington, simplifies the process: “The usual industrial questions are. What is the service they need? What are their expectations on turnaround? We’re generally doing a two-business-day turnaround at the worst. Then we can get to pricing and billing arrangements.”

“Volume plays a major role, but it’s far from the only factor,” Gausling says. “Commercial pricing is really about the full scope of the relationship. The type of items, the level of care and detail required, and the frequency and consistency. We look for a turnaround schedule, route frequency, packaging, presentation and all the requirements that go into the details with their account.”

Waterstraat boils it down to three variables. 

“It’s volume, frequency and work type,” he says. “If you’re a once-a-month customer, you’re probably going to be close to retail (price). The sweet spot is once a week, and you’re going to give us a heavy volume.” Fox prices most of his commercial work off his standard list. “That’s probably 95% of it,” he says.

What can hurt a cleaner faster than a low rate, Waterstraat says, is the wrong payment terms. 

“If you don’t set your net terms correctly, your cash flow is upside down,” he says. “We’ll set them to a net 10 (days), and you’ve still got to remember that’s 20 days before you get paid. Your payroll doesn’t go away. Your rent doesn’t go away.”

He also recommends ACH electronic transfer over credit cards for large accounts: “If you’re doing $50,000 worth of work and that’s 3% on a credit card, you’re paying it. You really want to ACH that transaction.”

The biggest day-to-day challenge, Gausling says, is keeping the commercial flow separate from the retail business. 

“The larger the account is, the more uniqueness and expectations they will have,” he says. “Different turnaround times, different service-level commitments, different logistics. Keeping track of that commercial hanging inventory as it moves through the production process is probably the biggest challenge.” 

Labor planning is the other pressure point, especially in a market like Las Vegas where major events can drive sudden spikes in volume. “We know we’re going to have overtime,” Gausling says, “but we have to plan around that overtime.”

The constraint that comes up most often for Waterstraat is physical space. Helena’s plant covers about 14,000 square feet, which is larger than most independents but small compared to the largest national operators. 

“There’s a lot of work that Cintas doesn’t pick up because it’s too small,” he says. “We’re that next tier. We’re not your mom-and-pop dry cleaner size, but we’re big enough that we can handle some of that.” 

Bulk commercial accounts may drop off pallets, with sea vessels, clothing rental companies and others sending 10 or more on a single day. “You have to have the right garage doors,” Waterstraat says. “You have to have the right equipment to move it.”

Come back Tuesday for the conclusion of this series, where we’ll look at how to start the commercial client process, how to keep those clients and knowing when to pass. For Part 1 of this series, click HERE.