Neanderthal

iTrader: (6)

Set up business by myself last year. Things have been going fine, however I'm finding that one client is really slow at paying invoices. When I agreed to undertake work for them we agreed on 30 days payment terms. This is written on the bottom of each dated invoice.
The last invoice I sent them (and subsequently handed in person 3 weeks later) is now 64 days old.

I don't have that many clients and I don't want to pee them off but I can't afford to be waiting 2+ months for payment so I'm thinking of charging interest on late payments in the hope that it'll encourage them to pay within the agreed timescales.

This is where I get stuck, is there a general %'age companies usually charge?

I'm still relatively new to all this stuff and hate the 'admin' side of working for yourself.

Matt

Oakers

Not sure on the exact amount but as long as you state on the terms of the invoice that you will charge them if they are late then I reckon 10% should be fine. You could run the risk of offending the client, so maybe add in a discount if they pay early?

Leslie

Sounds fair to me.

Les

Luminous

iTrader: (3)

Always a hard one, but you have to bring it up with them. Companies know what they are doing when they are slow to pay. I do some websites for people, for me its easy. Invoice, reminder, "lights out"

Neanderthal

iTrader: (6)

Yeah I wish I could hold back sending them the drawings until they've paid me.
The 'problem' client is an architectural practice working for the big developers. Ironically, I'm also working direct with one of the developers and they are much faster at paying, usually within a few weeks as they have end of month payments and mid month payments.

Terminator X

iTrader: (7)

You'll p*ss them off by doing that, running the risk of no more business. Better to talk to them in person & explain consequences of their actions on you IMHO. Charging interest should be your last resort ...

As my old boss used to say re his suppliers - "they can sing for it"!

TX.

PS - the rate is normally BoE rate + x% over that. Normally be stated somewhere within (your) Ts & Cs.

PPS - why not offer them a "discount" if they pay you within 30 days

Luminous

iTrader: (3)

Yeah, you could try gentle persuasion. Such as letting them know you will hand deliver some drawings while picking up your payment for a previous invoice. You have to be careful, but subtle hints to start with are a good way. Hand delivering late payment reminders can be a good idea too.

You need to find out where the bottle neck is in the payments system, and ensure you get people on side. As soon as you manage that a little gentle pressure on the bottleneck normally frees up payment.

Luminous

iTrader: (3)

Yeah, you could try gentle persuasion. Such as letting them know you will hand deliver some drawings while picking up your payment for a previous invoice. You have to be careful, but subtle hints to start with are a good way. Hand delivering late payment reminders can be a good idea too.

You need to find out where the bottle neck is in the payments system, and ensure you get people on side. As soon as you manage that a little gentle pressure on the bottleneck normally frees up payment.

The Zohan

They should have be informed of this first in (ideally) your T&C's and on the bottom of each invoice. You can change your T&C's at any time but the changes and implications can only take effect from the date of the change in relation to when the contract is signed. This is good business practice

However i have done this is in the past successfully, is to stage the payments 33% a month (week?) prior, 33% on the day of delivery and 33% 1 month after completion that way you are only exposed for a much smaller amount outstanding. you can also then charge interest on the amount outstanding and it shows a good commitment from your client

This is not uncommon.

ScoobyWon't

Give them a ring and tell them that you are still awaiting payment. Expect the old excuses - the secretary is on holiday, the accountant is ill etc.

Would it make a difference if you asked for payment in advance?

gpssti4

iTrader: (6)

The discount is in the form that you've initially added 'X'% to the quote - 2 or 3% is usually sufficient, then give them their discount for timely payment. That way you're not 'short' for them paying on time.

Or, just approach them and explain that they're causing you problems. I have it in my job too - bad paying customers grrrr

Trout

iTrader: (1)

First of all to be able to charge interest you must have that in your agree contract, terms and conditions, statement of work or terms of reference.

If you have not then you cannot charge interest.

As TX states, interest is normally BOE plus x%. It is usually about 8%, charged on a daily basis. You can choose to charge higher. Once this is in your contract you can charge interest and expect your client to pay.

Personally I would use my relationship with the client to get them to pay - but have a 'stick' you can wield in your contract if you need to.

I have rarely seen any supplier actually invoke the invoice charge.

If a client does not want to pay up and you don't mind losing them as a client there are some very powerful techniques to get them to pay within hours - but you would not be able to work with them again!

Scooby Soon!

if you want to **** someone off try to charge them interest, I would never deal with anyone again who did that.

Call them speak to the boss or who pays the bills (don't leave messages) tell them that you NEED the bill to be paid and by what date can they guarantee that you will have the money in the bank and then take it from there....

Scooby Soon!

if you want to **** someone off try to charge them interest, I would never deal with anyone again who did that.

Call them speak to the boss or who pays the bills (don't leave messages) tell them that you NEED the bill to be paid and by what date can they guarantee that you will have the money in the bank and then take it from there....

scarey

also find out who in the company physically pays the invoices.

when you email your customer the invoice, copy this person in so you know it gets to the accounts dept straight away. If your customer takes a couple of weeks to even get the invoice to accounts you could miss a payment run and have to wait a month for the next one.

Trout

iTrader: (1)

Great point. With my largest client I discovered that my invoice would go through three (thankfully email) approvals. It would then get processed by some guy in India and I would get paid.

Now I email my invoice and copy all the approvers and the guy in India. He then does reply all asking for approval and the invoice is paid. Normally I get the money in my bank within seven days of invoice or less.

Neanderthal

iTrader: (6)

It's only a small firm (although in the last couple of months it's expanded rapidly). I physically handed the overdue invoice to one of the directors who said "oh it's only a small one, must have slipped through, I'll get it paid by BACS". This was 4 weeks ago.
I normally email invoices direct to the woman who deals with payments.

Like I said, I don't want to burn any bridges. I've previously had words with them when after submitting one invoice they told me "We won't pay you till our client pays us" to which I pointed her to the fact that's not in my terms and give them their due, they did pay.

I've tried speaking to both the director and the woman in accounts. Left messages and emailed. Will keep trying!

Thanks to everyone for their advice

MMT WRX

Most companies will want to hang on to their money as long as possible as the accountants will be managing debtors days v creditors days.

We have one company that owes us quite a lot, our terms are 30 days, theirs normally are 30 days from the end of the month the invoice is presented. When it gets to their year end this can even run to 4 or 5 months. I have heard of people that are 12 months overdue and when they've complained too much have been struck off the supply list.

My Mrs used to do debt recovery for one of the police HQ's and even with this experience struggles with some of the *******.

I think maybe, like trout has suggested, make sure your invoice is being authorised asap by emailing it to all the relevant people. You could also try talking to them explaining your position - re being a start-up business - and really would appreciate overdue payments. It is also worth checking to make sure they've set their system up to your payment terms not theirs, we've had companies forget this before.

mykp

ive been in business for 8 years and when any customers who dont pay on 30 days have this facility removed from them. However my T&Cs state this on my invoices, "If payment is not received within 30 days then further credit terms will be removed and all subsequent invoices must be paid on delivery"

I have a few customers who've tried it on in my time in business and now if they dont pay on time I just place them on stop until the invoice is paid.

One thing I will say is that dealing with company accountants is dont take anything they do personally. There job is NOT to pay you and retain monies for their employer for as long as possible.

By the way 64 days is nothing, I have 2 invoices currently outstanding from October 2009 and February 2010. I know I will get paid from them its just their accounts departments work on the same scale as ice ages!

john_s

iTrader: (1)

Not true.

If it's not part of your contract, it's provided for by legislation that you can claim interest on late payments... have a look for the Late Payment of Commercial Debts (Act or Regs - I can't remember which).

MMT WRX

Clicky

ScoobyWon't

What's going on with NSR these days? I've not seen a single mention of "send the boys round"

David Lock

Some companies expect to receive a Statement which always seems a waste of time and paper to me! But they can be useful as you can highlight an Invoice and mark in bold THIS INVOICE IS NOW OVERDUE which may speed things up. Generally though tracking down the person who posts out the cheques is the best bet.

And then send the boys round

dl

Trout

iTrader: (1)

I stand corrected - now that I am reminded I knew I got that 8% from somewhere but put it in my contracts anyway!

jods

Do similar to Florida Tax Collector

Ad Velorum Tax ( Council tax to you and me)

Amount Due "for example" £1000 + VAT = £1175.00

If paid within:
8 weeks : £1000 + VAT
4 weeks : £975 + VAT
2 weeks : £950 + VAT

Failing that.....

Send the Boys round and pound him like yesterdays beef.

Dedrater

Ahh, define contract in this instance.

The minefield of British provision and procedure regulations since: Time.

Dedrater

btw, bulls*it I know.

spufus

iTrader: (2)

Sorry to the OP, but Lumi: How do you do the "lights out"?

It's easy to turn off their site. But how do you force them to pay for said site?

Neanderthal

iTrader: (6)

Well I'm still up finishing work for a client that does pay quickly
Spufus, I imagine Luminous's clients pay up pretty sharpish once their website gets turned off.

spufus

iTrader: (2)

Me too.

Depends on how important the site is to their business & how they see the value of the site to their business.