Late Payments - is it only me?
Discussion
Im probably posting, just to vent and just let off steam.
Im a business owner, 28 and have NEVER been able to afford my own car. But im excited as Im about to buy my first set of wheels, a TVR (V8S I hope) for 8k-ish
I feel frustrated beyond explanation though... Im actually owed enough cash to buy brand new Tuscan S - yet its a mission to get the 8k together for a first car, and usually a struggle to pay bills.
How many people here suffer from extreeme cashflow problems, ALL down to clients never paying on time, sometimes not for 12 months.
Ive got debts dating back 12 months. I really cant threaten my clients, or I loose them for life, and the business im in (IT) every single client (80% of them) bring in new business themselvess, and introduce others. Word of mouth rules.
I dont know what to do. Invoicing agencies wont work, they *loose* you clients.
I gained my biggest client FROM another company who pissed him off by threatening him because his payments were late. This new client of mine left his old company to come to me, for the sole reason that they got shirty with him for not paying. He's spent 10k so far. If I threatened him Id loose him too. Same with all clients. And yes, I have terms and conditions, but no one pays them any notice.
Feeling very frustrated... Tell me im not alone.
(edited to say 12 months)
>>> Edited by ukbob on Thursday 1st July 19:37
Im a business owner, 28 and have NEVER been able to afford my own car. But im excited as Im about to buy my first set of wheels, a TVR (V8S I hope) for 8k-ish
I feel frustrated beyond explanation though... Im actually owed enough cash to buy brand new Tuscan S - yet its a mission to get the 8k together for a first car, and usually a struggle to pay bills.
How many people here suffer from extreeme cashflow problems, ALL down to clients never paying on time, sometimes not for 12 months.
Ive got debts dating back 12 months. I really cant threaten my clients, or I loose them for life, and the business im in (IT) every single client (80% of them) bring in new business themselvess, and introduce others. Word of mouth rules.
I dont know what to do. Invoicing agencies wont work, they *loose* you clients.
I gained my biggest client FROM another company who pissed him off by threatening him because his payments were late. This new client of mine left his old company to come to me, for the sole reason that they got shirty with him for not paying. He's spent 10k so far. If I threatened him Id loose him too. Same with all clients. And yes, I have terms and conditions, but no one pays them any notice.
Feeling very frustrated... Tell me im not alone.
(edited to say 12 months)
>>> Edited by ukbob on Thursday 1st July 19:37
Yep. You are not alone!
Cashflow is king! I ran a very protitable design angency a few years back that very nearly went to the wall, not because we weren't profitable but because the clients wouldn't let us have that profit on time!
Couple of options;
1. Factoring houses can be of benefit but only as an ALTERNATIVE to an overdraft (never do both!). Not all will annoy customers although the best ones will be quite selective about the clients whose invoices they factor. So if one has a very bad history, they won't touch them (which sort defeats the object of them anyway).
2. Get written purchase orders or some other written confirmation. This way, the bank is likely to be more accommodating if they can see "proof" of work in hand.
3. Be open with your clients. If you know when you are going to get paid, then you can plan accordingly - even if it is 6 months, at least you know!
4. You are in a position where you can possibly hold clients to ransom a bit. We had a client who owed us a stack of money and were about to put a hold on any more work. But we received an order from him to design and produce a whole stack of exhibition material (stands, brochures, goodie bags, etc). We agreed to do the work but held off delivering it until the evening before the exhibition. So there's Mr Client, waiting by his space in the exhibition hall for all his stuff to arrive when we telephone to say that the van is outside but the driver will not grant access to the goods until he gets a cheque for the outstanding amount. Guess what - he paid up...and he's still a client!
I have to say though, 12 months is way to long. You're in business to make money and I wouldn't worry about loosing clients who take that long to pay.
Cashflow is king! I ran a very protitable design angency a few years back that very nearly went to the wall, not because we weren't profitable but because the clients wouldn't let us have that profit on time!
Couple of options;
1. Factoring houses can be of benefit but only as an ALTERNATIVE to an overdraft (never do both!). Not all will annoy customers although the best ones will be quite selective about the clients whose invoices they factor. So if one has a very bad history, they won't touch them (which sort defeats the object of them anyway).
2. Get written purchase orders or some other written confirmation. This way, the bank is likely to be more accommodating if they can see "proof" of work in hand.
3. Be open with your clients. If you know when you are going to get paid, then you can plan accordingly - even if it is 6 months, at least you know!
4. You are in a position where you can possibly hold clients to ransom a bit. We had a client who owed us a stack of money and were about to put a hold on any more work. But we received an order from him to design and produce a whole stack of exhibition material (stands, brochures, goodie bags, etc). We agreed to do the work but held off delivering it until the evening before the exhibition. So there's Mr Client, waiting by his space in the exhibition hall for all his stuff to arrive when we telephone to say that the van is outside but the driver will not grant access to the goods until he gets a cheque for the outstanding amount. Guess what - he paid up...and he's still a client!
I have to say though, 12 months is way to long. You're in business to make money and I wouldn't worry about loosing clients who take that long to pay.
couple of other things:
If your clients are public sector, a call (or the threat of) to the Audit Commission can do wonders!
Also, take the time to see what the billing protocols are for the clients you work with. Quite often, you are so keen for the business that you overlook how they want you to invoice which delays payment.
Another tip is to bill monthly for work done (if you can). This splits your bill into smaller amounts and so affects the client's cashflow less. It also means you are getting regular payments over a period of time rather than having to wait forever for that one lump.
If your clients are public sector, a call (or the threat of) to the Audit Commission can do wonders!
Also, take the time to see what the billing protocols are for the clients you work with. Quite often, you are so keen for the business that you overlook how they want you to invoice which delays payment.
Another tip is to bill monthly for work done (if you can). This splits your bill into smaller amounts and so affects the client's cashflow less. It also means you are getting regular payments over a period of time rather than having to wait forever for that one lump.
ukbob said:
I gained my biggest client FROM another company who pissed him off by threatening him because his payments were late. This new client of mine left his old company to come to me, for the sole reason that they got shirty with him for not paying. He's spent 10k so far. If I threatened him Id loose him too. Same with all clients. And yes, I have terms and conditions, but no one pays them any notice.
Feeling very frustrated... Tell me im not alone.
Why is losing a non-paying client a bad thing?
I've only been working solo for 18 months but none of my customers have ever paid late. I invoice, they pay within 30 days.
The majority are large, national/multi-national firms, I'm just a solo software developer/consultant. I've worked with most of my contacts for many years, so a degree of trust and dependency exists between us.
If at some point they chose not to pay, I'd stop working, and so would their systems.
The majority are large, national/multi-national firms, I'm just a solo software developer/consultant. I've worked with most of my contacts for many years, so a degree of trust and dependency exists between us.
If at some point they chose not to pay, I'd stop working, and so would their systems.
TDTH1975 said:
Offer discounts for upfront payment, you may get slightly less in the short term but you will see a lot more in the long run.
It works!
Depending on your normal payment terms, offer 5-10% discount if payment recieved within half of that time. (eg 30 day terms, 5% disc if recieved in 14 days)
Everyone like to think they are getting products and services cheaper.
As for the existing outstanding invoices, try talking to the the person who ordered the work you did (or someone who has some clout within the company - eg not accounts dept) and explain the lack of payment and that with cashflow being a problem you may have to stop trading/ find other work/ etc (a nice sob story). If they value your work, they won't want to lose you.
Following on from an earlier post, I would also ring allong the chain of people that sign off on the payment.
Ring the person who ordered/signed off on the project and ask them if there was a problem with the work done or any other reason for holding things up.
Find out who they past it to and then ring them and ask the same questions. and so on and so on.
Eventually you should get to the end of the chain, with no excuse for not paying.
As a side issue, a company I used to work for (now solo) never paid unless they got chased, then you magically went to the top of the pile!
Ring the person who ordered/signed off on the project and ask them if there was a problem with the work done or any other reason for holding things up.
Find out who they past it to and then ring them and ask the same questions. and so on and so on.
Eventually you should get to the end of the chain, with no excuse for not paying.
As a side issue, a company I used to work for (now solo) never paid unless they got chased, then you magically went to the top of the pile!
Sorry to hear this. There are companies who seem to take pride in never paying their bills on time. One ad agency near me is famous for it - their reputation is such that if they ever wanted me to do work for them it would be credit card up front.
What is the effing point of it? It's hardly as though they're making a fortune in interest by hanging on to your money for 12 months. It's just bloody unprofessional. I appreciate you don't want to upset them by bullying them for payment - but hang on - which party has the most right to be upset here? You!
Certainly don't do any more work for them until they've cleared the debt. Then try to move them to a cash with order basis. They will probably squeal, but that's too bad. In the meantime, look for replacement clients who will pay on time. If they're in genuine difficulty, you'r ebest off without them becasue there's a a risk they'll go pop and you won't get anything, ever. Ask yourself who's in charge of what you do? You or them? Who's supposed to make the rules?
I fear they are just using suppliers in a 'slash and burn' manner, and maybe one day they won't have any left. Then they might realise that without good suppliers, they can't trade either.
What is the effing point of it? It's hardly as though they're making a fortune in interest by hanging on to your money for 12 months. It's just bloody unprofessional. I appreciate you don't want to upset them by bullying them for payment - but hang on - which party has the most right to be upset here? You!
Certainly don't do any more work for them until they've cleared the debt. Then try to move them to a cash with order basis. They will probably squeal, but that's too bad. In the meantime, look for replacement clients who will pay on time. If they're in genuine difficulty, you'r ebest off without them becasue there's a a risk they'll go pop and you won't get anything, ever. Ask yourself who's in charge of what you do? You or them? Who's supposed to make the rules?
I fear they are just using suppliers in a 'slash and burn' manner, and maybe one day they won't have any left. Then they might realise that without good suppliers, they can't trade either.
I would rather have no client than a non paying one. Sorry if you new the clients history before you took them on then really you have to blame yourself to an extent.
Always credit check new clients and make payment terms clear. Do not be afraid to ask(demand) your money. If a client gets pissed of at being asked for money that is owed and very late then they are bad for business and should be dropped. Your time would be better spent looking for "paying" business.
Just me 2p's worth
Sam
Always credit check new clients and make payment terms clear. Do not be afraid to ask(demand) your money. If a client gets pissed of at being asked for money that is owed and very late then they are bad for business and should be dropped. Your time would be better spent looking for "paying" business.
Just me 2p's worth
Sam
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