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Late payers!
Does anyone out there get serious problems with late payers? What systems do you put in place? Talking to other signs co’s around here they have the same problem. Thought about using baseball bat tactics!
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36 Replies
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get tough they only do it if you let them, having done it once they will do it again unless you put systems in place to prevent it
John
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I do a half up front, half upon delivery system.
No money=no sign.
Love…Jill -
We do a large amount of work for the motor trade and for some reason they always pay upto 2 weeks late. Getting tough with them doesn’t go anywhere. They just delay even longer. If you get too hard their reply is "well if you no longer want to do business with us……..!" Need to avoid this because they are worth a tidy sum.
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I do same as Jill… 50 % up front. . no deposit no signs. I have only ever had one or two people get the hump. .
As a I seem to have problems from larger companies and their accounts department !
A nice polite letter reminding them that payment is over due, followed by another one indicating an approaching late payment fee + interest normally does the trick !
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i get a few of these,
regular customers get 30 days with us and we have stared to pro-forma invoice alot of our larger one off jobs. the reason for this is that we have some outstanding invoices from as far back as April (hot)
it cheeses me off cuse you don’t go to burger king and get a meal and pay it 6mths later do you !!
customers – who’d have em (?)
roffs
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Karl just read your other post. . I’ve had this happen. .
I have a customer with about 30 VW transporters. Every couple of years they get new ones, plus their drivers are nutters and the vans are constantly in and out of the body shop. I get a slow but seemingly constant amount of work from them.
They are slow payers but I always get my money. I don’t really hassle them about payment anymore..Anyway there are slow payers and there are people that just take the P!$$, having worked in the motor trade I know what a circus it can be. .
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quote KARL WILLIAMS:for some reason they always pay upto 2 weeks late.You’re having a laugh Karl.
If everbody was only two weeks late life would be much easier.
Folks like the motor trade and larger companies have procedures and you won’t short circuit them. Know your customer, and if you know they are going to take six weeks to pay then adjust the price for the job to allow for that.
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I know 2 weeks sounds daft to start getting peeved off. but when you’ve given them 30 days already, plus more work being financed for them while still waiting, and the other late payers, no one is laughing john. Don’t get me wrong I’m not gunning for a moan, just wondered what systems others put in place. The late payment fee does sound the best.
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Like John said with bigger companies they have definite systems that are hard to get round, the invoice will arrive and be sent to the person ordering the goods, they will have to sign it off and then it can go back to the accounts department and so on.
It can get worrying having invoices outstanding but 2 weeks is not even close to late, try 90 days.
You may find they pay at the end of the month following the month of the invoice, so this could effectively be 60 days. This is very regular.
Best thing to do is get in touch with the accounts department and have a polite chat to see how their system works, this is also the time to point out any terms agreed with your customer.
Steve
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Hi Karl.
I didn’t mean to sound flippant, because it can be a serious problem, but five weeks (three plus two) shouldn’t really be a problem.
On a standard monthly account, where you request payment by the 20th of the month following supply, they could order stuff on the first of one month and payment would not be due for seven weeks. Realistically they are always into me for two months work and I consider the expense involved in that a normal cost of doing business and don’t lose any sleep over it. It’s only right and proper really. Do you not deal with your own suppliers in the same way? We are owed money by our customers, but we also owe to our suppliers so our actual net cost of credit is not as high as our debtors figure would suggest
A late payment fee is a non starter because they will never pay it. In the larger organisations the person paying the bills is not usually the person ordering the goods and if the order is for one amount they will not write a cheque for a higher one. That’s their job, to stop the likes of us from billing more than we quoted.
Anybody to whom you give credit should be a regular customer so you will know their payment record and, if they are slow, just add an appropriate amount to your quote. Like I said above, you will not change their payment procedure, so why waste your time and get all excited by even trying? We have one client who writes out and even signs cheques the minute the invoices are received, then sticks them in the desk drawer until the supplier rings up and chases it. We know this, and give them a call once a month but some of their other suppliers will wait months. Is it right? Well, maybe not, but that’s the way the world works
The irregulars and one-offs, without a credit account, will naturally pay up front, or at least fifty per cent deposit with the balance on completion.
When paying my own bills I take a flexible approach. Regular suppliers get paid by the end of the month following supply. Suppliers who are also customers get paid on the same terms they pay me, which can be fun when they factor out their invoices. People we like, or who we consider are doing us a good turn, which includes anybody from this board fitting for us, get paid by return.
I have to say though that we find the motor trade to be amongst the best payers. They demand payment from their customers on time and our experience is that they are not surprised to have to pay on the same terms
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Have you actually asked them what their payment terms are Karl? You say that you have given them 30 days but in my experience the bigger firms will pay you on THEIR payment terms and not yours.
It is worth speaking to their accounts department as this can sometimes help, I had a couple of customers who payed on 90 days which meant that I was out of pocket for longer than I could really afford on occassions. After speaking to the accounts department of one of these companys and explaining that I would like to do their work but couldn’t afford to do the work and wait 90 days to get paid as I was only a small company myself they agreed to pay me on reciept in the future which they did.
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At the start it was supposed to be : Get the invoice in on monday, and the cheque will be with you thursday. Then without being informed, : We now pay on thirty days. Yes of course I make sure I ask about payment terms, It would be stupid not to. the dealers seem to change the rules every so often and don’t inform the suppliers. Ive not come across a company like this before. I understand totally where john is coming from, but I just think this is taking the P!**!
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January is always a bad time for getting paid. Many customers are even slower than usual. I send a statement out a 30 days and a formal letter requesting payment at 60 days. If they still haven’t stumped up I start phoning 7 days after my 60 day letter. It is rare for any payment to be any later than this. Anything that gets beyond 90 days is starting to worry me and a personal visit to collect a cheque usually works.
I had one large house builder a few years ago (a major Scottish company) that routinely "lost" every second invoice I sent them. I ended up refusing them any further credit and lost their business. Maybe if everyone refused credit to the bad payers they would run out of suppliers to turn to (hot)
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mostly it’s a deposit and payment on completion, however we do work for several big company’s, if you set your self up with them properly in the first place ie: bac’s etc. you do get paid to their rules but once you are in their system you get paid by clockwork it may not be as quick as you like, we do work for some body shops it’s not mega money per job, but tidy amounts at the end of the month, all be it the month after !!! I don’t send statements and have always been paid, just chat to someone to make sure you are in their system, and most are sympathetic to small businesses well thats my experiance, you can even get paid by big companys in advance, if they want what you have they will find a way to pay you sorry rambled a bit, but at the end of the day what you say goes
Lynn
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John my friend I hope you dont mind if I take issue with you on a small point
quote :A late payment fee is a non starter because they will never pay itlate payment legislation is now in force The regulations are contained in the late payment of commercial debts (interest) Act 1998 and the late payment of Commercial Debts Regulations 2002. The provisions apply in England and Wales and there is similar regulation in Northern Ireland and Scotland.
A useful calculator and other info is available at http://www.payontime.co.uk/calculator/statutory.html
I certainly need to get tough with a few liberty takers as my new years resolution
Good luck all
John 😀
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this is interesting as its one of the problems that is affecting us at the moment, we have too many people who seem to be holding back at the moment, we are currently working on a quickbooks linked database to help our staff work out what payment terms and if some of our customers should be on stop.
We have designed our building where we have a reception and a sign pickup area which then leads them to the invoicing computer where we can ask for payment, this does work well. However cars are tricky as we have to withhold the keys until the customer (or as most of the times the van pickup guy) comes in and escapes payment and then end up on 30days (when they are COD!). Also another awkward one is putting signs up and then our fitters moves on, well we actually do need payments and then they suddenly become 30days instead of COD!.
Very intersting link above, learning all the time.
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quote John Harding:John my friend I hope you dont mind if I take issue with you on a small point
Not at all. That’s why we are here – to share opinions and experiences. 😀
I know that late payment is legislated for, and that I am entitled to make charges, but I don’t think I would keep any customer on whom I tried to enforce one. It would just antagonise them and make them think I was more trouble to deal with than I was worth.
I think my method avoids that danger and is a generally lot less stressful.
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The worst customer I have is my very own sweet brother! Always in a rush to get job done, but paying? More like paying in the nether regions!
They do say business and family don’t go well together! -
I don’t feel much sympathy for late payers that we were courteous enough to extend payment terms to. We understand that times are hard sometimes and our customers have to wait on money too from their customers, but when an effort isnt even made by the client to bring their account up to date then I get pretty annoyed. For example, a client we have had a term of 60 days, they had one job open for $40,000 USD. . . they went 190 days before any attempt was made to pay. Needless to say on the next order it was due upon receipt. Like I said, we understand our clients wait on money too, but make an attempt, pay when you can, dont make it look like you aren’t even trying after we turned our shop upside down and inside out to get your job finished on an insane deadline.
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George, I couldn’t agree more!
John, looked at the site. Fantastic! -
quote George Kern:We understand that times are hard sometimes and our customers have to wait on money too from their customers
Hi George.
That is something I hear regularly, but have never fully understood. It implies that if they never get paid then they shouldn’t have to pay you.
Why should your customers turn their credit control inadequacies into your problem?
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We use pro-forma invoices more and more lately, and never had a problem. The way I look at it is that if they are not prepared to pay pro-forma then they are probably not prepared to pay full stop.
Saying that, we do have a large amount of account customers. We use Sage Line 50, we set everyone a credit limit based on previous payment experience etc. When any account customer places an order, we check their credit limit to make sure it will not be exceeded and would then either review their credit limit or ask for a payment before the order can be processed.
We also send out monthly statements and reminder letters (Sage does this very quickly), and we have followed up with threats of County Court Action, however, have only needed to pursue this on a handful of occasions.
Something to bear in mind – some customers only pay on statement, so it is worth sending them out!
Remember, Credit is a privilege not a write. Could you walk into Tesco’s and walk out with a trolley full of food saying you’ll pay later! 😕
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Hello Chris,
Any idea what price this sage costs? I could do with something thats quick and easy to use. Time is always short and could do with a programme that saves time. -
Karl, sage is one of these programs that comes in modules and you add whatever module you need. I think the starting price is somewhere round about £300. Their website is http://www.sage.co.uk
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Hi Karl,
Sage is the one recommended by most accountants and is a full accounts package. There are different variations starting from around £100.
Have a look at http://www.sage.co.uk
Chris
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You beat me to it there Martin!!
Sage Instant Accounts is on their website from £110 +VAT. We have an annual contract with Sage and get all the latest versions included (have got Line 50 2007 but not had chance to load it up yet!).
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Thanks Chaps!
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Chris, when I was working I used Quickbooks pro which does much the same thing as Sage. I think sage is used by a lot more company’s in the UK though. What I liked about Quickbooks was that as well as doing all your invoicing and job tracking it did all your accounting work and was accepted by Inland Revenue for self assessment tax.
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Martin, I think Sage is almost like the industry standard for accounts now, Sage also own TAS (and maybe even quickbooks?).
I don’t fully know the in’s and out’s of Sage as that’s left to our Secretary and Bookkeeper, however, I have played about with it to raise invoices etc. and have been very impressed.
Sage is by no means the easiest accounts package out there though!
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Karl,
We use MYOB. Starting from £67.23.
http://myob.com/servlet/Satellite?cid=1 … _UK&c=Page
We found it easier and nicer to use than Sage.
It also has the advantage that our accountant doesn’t understand it and therefore relies on the figures we give him and can’t delve too deeply into the details. That’s exactly how I like it! 😀
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talking of late payers ………..
I’ve just had court papers served on a customer of mine. I did the job in July and still haven’t received payment. The job I did was a small part in a very large job he did for an international company. At 30 days I sent a statement and request for payment and when it reached 60 days I called, emailed and wrote to him again. He promised me it would be paid by BACS whilst I was away on holiday in October. Needless to say it wasn’t. In November I tried to contact him several times with no reply from him. (He’s based in London so I couldn’t knock on his door). He finally replied and apologised for the delay as he had been ill but assured me he would be paying by BACS within 2 days as he was now ‘catching up’ ………. payment never arrived. Anyway, in December I wrote to him giving him 7 days to pay or I would be taking court proceedings against him for non payment. He responded with, ‘your cheque was posted this morning’. That was 3 weeks ago. So I sent off the court papers which I filled out online and they were served this morning.
I just received an email from him, a ‘thanks very much’ email 🙂 ‘I’ve been very ill how could you do this to me’. 🙄Well he got paid his very large sum for the job months ago ………. his illness does not affect me at all. If he’d paid me on time it wouldn’t be an issue.
So we’ll see …………. he thought I was joking when I threatened court proceedings. I still don’t think he gets it ………. he said ‘just bear with me’ on his last email. But I’ve been more than patient, he’s got 14 days to respond to the court.
First time I’ve ever had to get to this stage. Shame 🙁
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My wife was a legal secretary and was well used to filling in the paperwork ie interest rate you are entitled to, fortunately I’ve only had to do the court thing two or three times all with good results. Fill in the form with their details etc, fax it to them with a note saying no cheque within 7 days and the form goes in, works wonders.
I use Quickbooks too, very easy, makes VAT time a very painless experience
Alan D -
quote Alan Drury:fax it to them with a note saying no cheque within 7 days and the form goes in, works wonders.
Alan D
I emailed him the pdf of the court papers before xmas and said they were being sent the following week. That was when he said he would send the cheque. So I posted the forms to the court on wednesday since he hadn’t bothered, (I honestly think he thought I wouldn’t do it) they were served this morning!!!!! Very quick!
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I had the same problem as Marcella a couple of years ago, £320 owed, he had the goods and my money so I went down the online claims route. I didn’t warn him I just went ahead. If I remember correctly it all took about 6-8 weeks, and it was one of those ‘punch the air’ moments when I got the money, not so much because of the £320.It was the interest that was added and also the bailiffs bills which meant he had to pay nearly £550.
Sad thing is I recon he will try it on again, he was that kind of person.
Steve -
I hate people using illness as an excuse, ok he may have been ill but if he is well enough to write an email then he was well enough to write a cheque and envelope, especially as you say, he was paid for the job long ago so has the funds available.
Lee
Incidently I’m ill at the moment (put my back out again) but I still manage to pay my suppliers on time.
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I don’t have a problem filing court papers to people who went so far beyond their terms its pathetic. Then you hear this quote "well then they won’t to business with you again". . . my response, if they can’t pay on time, then i dont want to do business with them. A no customer is better then a non-paying customer.
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