Late payers driving me absolutely crazy

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thekitchendesigner

thekitchendesigner

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Dec 5, 2005
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  • #1
    I have just about had enough of my clients taking an age to pay. It clearly states on my invoice, under the amount they owe, that payment is due within 7 days of reciept.:mad:

    Nearly all of them leave it at least 3 weeks, some 4, and some go on to 8 weeks. When i gets to 2 weeks i usually chase but this just seems to have no effect.

    This week for example, i have chased a client DAILY for various invoices which were due between 4 and 8 weeks ago! Every day he promises and nothing is paid. He has an assistant to do invoices but she is beyond useless. He is a very good client in respect to the volume of work he passes over and i dont want to go mad at him and risk losing him as a client.

    I provide a service, not a product, hence my 7 day payment terms. Would they leave it 4 or 8 weeks to pay a plumber or electrician?

    Can i get them to sign something that says if they are to use the design services they are to adhere to the payment terms? I dont have the time to chase them all the time as things are so busy.

    Any advice gratefully recieved before i go crazy!
     
    Rob Holmes

    Rob Holmes

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    theivybridgecollection.com
  • #5
    thekitchendesigner said:
    This week for example, i have chased a client DAILY for various invoices which were due between 4 and 8 weeks ago! Every day he promises and nothing is paid. He has an assistant to do invoices but she is beyond useless. He is a very good client in respect to the volume of work he passes over and i dont want to go mad at him and risk losing him as a client.
    Click to expand...

    Are they 4 to 8 weeks late and you've only just started chasing them?

    A client that doesn't pay isn't really a client :wink:

    Rob
     
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    creacom

    creacom

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  • #6
    I would recommend Nic too.

    I would also look at the way that you are chasing these clients up. Maybe some people find 7 days a bit short for payment terms. But that is your choice. Are you sending them out an invoice, then a reminder invoice, maybe an another and after a letter of payment default ? When it gets to the reminder invoice I would consider sending it out by recorded delivery. Adds a bit of weight behind it and noone likes to get unexpected recorded deliveries !!

    Hope it helps

    Jacqui
     
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    thekitchendesigner

    thekitchendesigner

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  • #7
    Rob - i've been chasing them a couple of times a week for the past few weeks. The trouble is that he has an employee who does all the admin, including invoices. A few weeks ago it was a repeat situation and i spoke to her (the assitant) about the invoices god knows how many times. Each time she said the cheque is waiting to be signed. She said this 4 or 5 times and then i rang again to confirm it had been, and she said "not sure whats happened with it" Jeeees!

    Her job is to 'assist' the boss so he can run the company, but i''ve given up with her as she is crap. So i'm chasing the boss and he's so busy he forgets.

    Jacqui - thanks for the reply. I think 7 days is fair becasue clients need their work turned around in just a few days, and alterations to this work even quicker. I allow them to ring out of hours & evenings on my mobile, and will often work very late if they need something urgently the next day. Its the nature of the industry really. For this prompt work i expect prompt payment.

    I dont send out reminder invoices as i dont feel they will have much effect. I always ring them and speak to them, then follow this up with emails, then call again, and so on.

    It seems some dont pay any attention to the invoice, as on it i have said who to make the cheques payable to - and when i recieve them they're made out how they feel is right!
     
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    creacom

    creacom

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  • #8
    Hi Mark,

    Well it might be worth a try sending out the reminder invoices or 2nd reminder invoices by recorded delivery. I know this works for a lot of people. That doesnt mean you stop calling them as well, but it does make things official and leave a trace to say that they have received the invoice.

    Jacqui
     
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  • #9
    You need to quote the appropriate legislation on your invoices.

    I say on mine: "[FONT=&quot]Please note that late payment is subject to interest charges and associated compensation payment under the UK Late Payment of Commercial Debts (Interest) Act 1998."

    You can find the info about getting late payers to cough on a site called payontime dot co dot uk

    [/FONT]
     
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    thekitchendesigner

    thekitchendesigner

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  • #10
    Hi plaintext - i'm not sure how effective this would be on the invoice - a selection made up their own mind who the cheques should be payable to, despite the fact its stated in bold lettering on the invoice!

    I'll have a look at the website, and i may consider attaching a slip on the front of every invoice in red lettering with words similar to yours!

    how can you then use the late payment act stated to enforce?

    Cheers,

    Mark
     
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  • #11
    Mark, have a look at the site (sorry I still can't post URLs) - the info is on there, including how to calculate interest and compensation. I had one notorious late payer. Someone advised me to quote the Act, which I did and I got paid immediately. Since I put the statement on my invoices I have always been paid on time.

    If they still don't respond, a friendly word saying you will start court proceedings should work, even though you regret having to take this step, will probably do the trick. No business wants a county court judgement against them.
     
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    D

    Deleted member 6566

  • #12
    Hi Mark

    Sorry to hear about your problems getting paid. I recently issued an invoice on 3rd April on 10 day payment terms and was told to expect the cheque sometime after the end of May! The company in question runs a monthly payment system using a freelancer so now I understand their system and timing I can work with it a little better.

    Re late payment legislation - take a look at the better payment practice campaign's website at www payontime.co.uk. You are perfectly entitled to add interest to outstanding invoices (this site even has an interest calculator to do it for you) however, as you say if it's a client giving you a lot of business you don't want to sour the relationship.

    Remembering that a sale is not a sale until the money is in your bank account however, have you considered using a factoring or invoice discounting service? or maybe using a third party, as suggested above, to make your collections seem more professional and organised (not necessarily to put the frighteners on)

    My only other suggestion would be not to do any more work until your invoices are paid. Once you've got the bosses attention they may be more willing to talk to get a more acceptable system in place.

    Lots of suggestions here!! only you will know which is most suitable but hope it's helped

    Nikki
     
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    K

    KM-Tiger

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  • #13
    I think most businesses expect to pay other businesses on an "end of month following invoice date" basis, and it looks like this is what is happening to you. I have a good few suppliers who are very grateful that I pay that promptly!

    Your 7-day terms just don't fit into the general pattern.

    You might do better to set your terms to payment in advance, at least for a substantial percentage of the invoice value. If your clients want your services, they will pay.
     
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    Antonia @limeone.com

    Antonia @limeone.com

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  • #14
    Just a little law on this.

    You can charge interest and also a penalty but you must be aware this is only on B2B contracts. If as I suspect you may also be supplying to the public the legislation does not cover this.

    The act says

    2. - (1) This Act applies to a contract for the supply of goods or services where the purchaser and the supplier are each acting in the course of a business, other than an excepted contract.

    The excepted contracts are explained thus
    (5) The following are excepted contracts-

    (a) a consumer credit agreement;
    (b) a contract intended to operate by way of mortgage, pledge, charge or other security; and
    (c) a contract of a description specified in an order made by the Secretary of State.


    The law bit ( light bed time reading!) is here http://www.opsi.gov.uk/ACTS/acts1998/80020--a.htm#2

    and here at http://www.payontime.co.uk/legislation/legislation_main.html is a calculator for the interest and some more information.

    The best way forward is of course well drafted terms and conditions and these can cover all of the types of customer and outline all of the interest and charges applicable on late payment.
     
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    K

    KM-Tiger

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  • #16
    Antonia @limeone.com said:
    The best way forward is of course well drafted terms and conditions .....
    Click to expand...
    Yes and no.

    The OP is hardly going to sue "a very good client" in order to enforce them. It's often the case that firms cannot pay because they are waiting on payment from someone else, or they are just inefficient in dealing with invoices.

    It might be better to agree realistic terms with this client, and deal with the cash flow implications another way.
     
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    DuaneJackson

    DuaneJackson

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    Jul 14, 2005
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  • #17
    Hi Mark,

    You're one of our KashFlow users aren't you? If so, do you send out the pre-written reminder letters? They usually do the job.

    I also find just putting the following two lines at the bottom of each invoice seem to help:
    _________
    We will charge interest on invoices that are paid after their due date.

    We will pass on any costs incured as a result of late payment on to you.
    _________

    We occasionally have clients phone up asking if they need to pay any extra because they are paying 2 days late.
     
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    KateCB

    KateCB

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    May 11, 2006
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    Barnsley, South Yorkshire
  • #19
    it may also be worth offering a discount for payment within 7 days - most businesses want to save money and if you can offer 2.5 - 5% it may do the trick; the other way that is guaranteed is to use credit factoring - this way the dbt is assigned to a credit factorer, and you get between 80 - 95% of the invoice total immediately - the debt is then the credit factoring agents and they chase the client.....Yes it costs you, but 80% of the invoice paid immediately is better for your cashflow then 100% in 8 weeks or so for some where cash flow can be tight.

    We tried the late payment act on our invoices to no avail, as if it is a good customer and you start adding 8% above base to their outstanding debts, they tend to get upset....!

    Kate

    martialdeisgn.co.uk Garment print and embroidery
    for all businesses, Martial art supplies
    for all disciplines.
     
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