Bad Debt

[maddaudi]

Hi all, hope somebody can help and apologies if this has been discussed before. We have a client who is now over 1 month late paying their invoice. We are quite a new company so cashflow is important. We have a clause in the invoice that says late payment will incur a 4% penalty of invoice value.

We have chased them for payment constantly and always hear a different excuse, they are a medium sized company and seem to be doing well.

My questions are these
When is it appropriate to take matters further, what are the next stages. I don't want to completely ruin the relationship as we may get further business, at the same time we aren't a charity and do I want to work with a company that don't pay their bills.

In terms of the penalty clause, do we invoice again for the penalty amount, will anybody actually pay this.

Thanks
Phil

[Eric Mc]

Only a month?

To be honest, nowadays that would not be considered too bad. After two months then you could start putting some serious pressure on.

Threat of a County Court Judgement often speeds things along.

However, as I've already intimated, it's a little bit early to be getting TOO heavy handed at this stage.

[steviebee]

Depends if they are a one off customer or something with a bit more long term potential. If the latter, then you can allow a degree of flexibility as future orders will overlap with payment of delivered orders......in theory anyway.

Either way though, as Eric says, if nothing's doing after two months, start winding the thumb screws.

It annoys me greatly that when we run a day or two over with someone like Viking, our account is stopped. If we did that with our customers, we'd go bust!

[2 Smokin Barrels]

Ring em up & talk to your contact. Maybe their standard terms are 60 days or something like that. Perhaps a whisper in the right ear is better than bashing the table.

If you want an ongoing relationship, court is seldom the solution.

[jacobyte]

Try this -

www.debtlist.com

[markmullen]

My dad is a professional credit manager and a member of the Institute of Credit Management.

He swears by a couple of solicitors he uses for debt collection on a regular basis, Waldmans and Thomas Higgins.

For less than £2 they will both send a letter before action advising the debtor that in 7 days legal proceedings will be commenced.

My dad has had brilliant results and at £1.25 + the vodka and tonic you can't go wrong.

HTH

Mark

PS If you need the contact details give me a shout and I'll ask him to dig out the details.

[alarmist]

in fairnes as said 30 days isnt out of the way, we now have only one account customer, and they regularly take 3 months. the reason i dont bother too much is we know them and there bill is loaded accordingly.everybody else pays with the job, and yes we may lose jobs now and again, but as an old friend once said, better the item is on the shelf than selling it and not being paid. as regards thomas higgins....companies that make the mistake of sending one of there letters dont get my repeat business.