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Fresh Threads: Price wars and late payment culture

  1. Kat Haylock

    Kat Haylock Community Editor Staff Member

    427 190
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    Hi UKBFers,

    Welcome to Fresh Threads, our weekly roundup of what's been happening on the forums.

    Here are some of the best picks from the last seven days:

    1. Suicidal tactics from competitor – what to do?

    intelligentppc, General Business

    intelligentppc’s business involves buying qualified leads from suppliers and selling them on to clients. While the margin they take isn’t huge, the value the company adds is in managing the individual suppliers and ensuring the quality of the leads is high enough. However, he was recently contacted by a supplier and told they’d been offered a much higher rate by a competitor.

    “I know for a fact that the clients can't pay more than they pay us and our competitor,” Intelligentppc says. “From experience, any higher and the model simply doesn't work for our clients. Our competitor is 100% not getting a better deal than us, it's not possible.”

    What the competitors have offered the suppliers, Intelligentppc suspects, is a deal that completely destroys the margin. If he were to match the rate offered, he’d be making an overall loss – it’s simply not sustainable. What should he do?

    Mark T Jones: A good old fashioned price war. Supermarkets do it all the time. Assuming your competitor has no secret weapon (they seldom do), it’s really down to who has the biggest balls or most cash in the bank. Biggest balls might, of course, mean holding out and not reducing your price.

    youngtrepreneur: Engaging in a price war is the worst thing you can do. Your competitor is trying to undercut everybody else, hoping that customers once loyal will jump ship, leaving everybody else out in the cold. Read the rest of youngtrepreneur’s excellent post here.

    Andrew Watton: I suppose in the short term you have to look at it logically and say - am I prepared to work for nothing? If you're not prepared to work for nothing then accepting you'll lose customers seems the only short term outcome. However, in the end someone will go out of business and I would just remind those that leave you that you'll be around for them should things go wrong.

    2. Is Amazon Seller Support getting worse?

    james3000, Ecommerce

    James has sold on Amazon for almost four years, noting that when he first started, the support was amazing and all cases were dealt within 24 hours.

    Over the last two years, however, it’s been getting worse and worse. The staff have a bad attitude, and it feels like they’ve been trained that the seller is always wrong. He’s had items stolen and empty boxes returned, and his trademarked brand is being used by other sellers – yet there’s been no response.

    Mr D: I haven’t found it amazing; it’s been pretty bad for several years. Last time they rang me, they kept asking for information that doesn’t exist. Every time I told them that, they asked for the same information again within seconds. No ability to cope with off-script replies or unusual requests like “why have you stopped payment?”

    Andy777: I could be lucky, but my experience over last year with Amazon Seller support has been nothing but great. I’ve had responses within a few hours during business hours and even on weekends. Same experience with USA support too - last week I had a problem with registering an existing UK Brand Registry name on the US site and I got very detailed, quick responses on what I need to do to get it fixed.

    The only times when I feel like I'm hitting a wall is when I ask something very specific or technical and I get generic answers or FAQs. But then I just request a call back and speak with phone support, which is usually better trained than email support. 

    RSR Fulfillment: Of all the places I sell (Ebay, Amazon, Google Shopping and Shopify), Amazon has always been in fourth position. We have had our account hacked, they have sent us emails about being chucked off that were meant for other vendors and they have cocked up our product feed. I don't even check the feed any more. What sticks, sticks and what sells, sells. They are not in the business development strategy at all.

    And the four reasons for basically ignoring the Amazon account are: the rates are the highest, the system is not stable or user-friendly, there are security issues and the support is pathetic. It still makes up about 20% of sales, but the effort to get it higher is just not worth it.

    3. Advice on late payers and adding late payment charges

    ScottyTaylor, General Business

    Scotty runs a small cleaning company and, like a lot of other small businesses, he’s struggling to tackle the culture of late payments. He’s recently had a few commercial clients who need to be constantly changed, so he’s wondering if he can add late payment charges to his invoices.

    They currently send an invoice after the first month’s service and payment is expected on recipe of the invoice, but there’s always a delay with the large firms and it’s messing up their cash flow. What’s reasonable charge and how should it be worded?

    mjclob: You can add late payment fees and interest to late payments. I would clearly state on each invoice when payment is due, so any charges are clear. You can add a fee of £40 - £100 on top of the interest, depending on value of the invoice. Have a look at this link

    Nochexman: Scotty, have you considered asking these late payers to pay in advance? Something to think about going forward.

    Bovine: Although you can charge, it should probably only be used as a last resort. I think the reality is your expectations aren't matching the expectations of the accounts departments you are dealing with. Larger companies are generally not good at paying things quickly. They have a process to follow and may not do payment runs very often. The trick to getting paid is to understand what you need to do to get paid when you want. Often it will involve adjusting your expectations accordingly. 

    4. Business partner has locked me out of our business

    Syborg, Legal

    A few months ago, Syborg and his business partner got into a small argument. Soon after, Syborg found himself locked out of all the company’s resources and his business partner had changed all the passwords and access rights. As the company’s run entirely online, he’s effectively frozen out.

    The business is registered in the UK and they both signed a partnership agreement, but his partner is based outside of the EU, making it hard to have a face-to-face resolution.

    Syborg’s looking to take back control of the UK side of the business and freeze the bank accounts. While he hasn’t put any money into the business, he’s been working for two years without pay to get it off the ground. Is regaining control of the company easy to do, or is it likely to require expensive legal action?

    Chris Ashdown: Without spending lots of money on legal fees, I doubt there is much you can do apart from write it off as experience.

    Gecko001: The partnership is still in place and you will have liabilities, but you will also have continuing rights as to how the partnership's assets are used, including any copyrights it holds or rights on designs that it produced. Your rights will continue even though you are not active within the partnership anymore.

    The Resolver: Freezing the bank account is likely to happen once you put the bank on notice of the problem (albeit being careful with the words chosen to not gift a defamation claim.)  There would seem to be a good claim against the other person for what he has taken from the company, and for various breaches of his duty as a partner to do things only in the interest of the partnership business. 

    Whether court action is wise depends on how much value has been lost and how much cash is left in th eUK bank account Given he, and presumably other cash (from sales of LLP property) , is out of the country, court action becomes more costly.

    Have a wonderful weekend!

  2. Furqan721

    Furqan721 UKBF Contributor Full Member

    33 0
    Thank You for sharing this stuff!
    Posted: May 16, 2018 By: Furqan721 Member since: Feb 26, 2018