habitual late payers

[lfw]

Hello, I have a few trade customers that seem to wait until the last letter, Notice before Action before paying. I have a system set up so the customers get emailed when the account is due, 7 days, 14, 21, 31 and then 45 days overdue. I also send statements out by post to customers that are slow. and chase on the phone.

I am tired of being treated like a bank. Should I revoke the 30 days credit? Between customers going bust and not paying at all and the slow payers, I am finding it tough with cashflow. I know times are tough for everyone, but always being paid late and with the possibility of the customer going out of business is stressful. I sell retail as well on a different site and via amazon so the customer can find my goods elsewhere.

If I revoke their 30 days credit and say pro forma, maybe I will sleep better at night. Any advice on what to do with the slow payers?

edited to say. I don't offer credit now to new customers, the problem is with my older customers who are getting increasingly worse at paying.
I can offer them Klarna checkout where klarna takes the risk for non payment. Klarna is 14 days interest free. Or they can pay before goods ship.

 

[STDFR33]

Issue a seven day letter as soon as it becomes overdue and state that if it isn't settled within 7 days, court action will be taken.

Don't keep sending out chaser letters that are ignfored until the final stage is reached. Ensure the final stage is much sooner than normal.

 

[Ivel]

I have similar problem and it seems it is with the older clients that I have some relationship with. I learned my lesson after a client of mine just left the country without paying me and I had to go through court claims /more costs/, asset freeze /even more costs/ and I am still not paid.

The 30 days credit is something most businesses take for granted, if it is overdue start chasing hard. I find a phone call normally does the job. Try to explain them that as small business you also need the cash.

 

[lfw]

Issue a seven day letter as soon as it becomes overdue and state that if it isn't settled within 7 days, court action will be taken.

thanks, makes sense. I noticed that is what DHL and TNT started doing this year. Sending me a letter as soon as the invoice is overdue 7 days.

 

[Newchodge]

I would inform your habitual late payers that from x date, your terms are changing to payment on receipt. Explain that this change is because of failures to meet previous terms and that failure to meet the new terms will result in payment in advance.

 

[Ian J]

I'm not a big fan of sending letters to chase overdue debts unless you are a substantial company happy to put customers on stop if their accounts are unpaid.

I have always found that telephone calls are more productive unless you have hundreds of customers with small balances outstanding

 

[Business News]

A non paying customer isn't a customer. A late paying customer is fine so long as they are regularly late. A customer who doesn't pay till threatened is probably the most dangerous kind of customer because if they are that short of cash to pay the bills they are the ones likely to fold.

We have a written credit policy that is on revision 1 after 14 years of trading. It gets issued when customers fail to respect terms and once issued the account is on hold. There are then two stages to follow, first will be a lowering of the credit limit for future transactions. Second stage is closure of account and court papers filed. It works a dream, weeds out bad customers who have all subsequently failed as companies leaving our competitors holding the bag or payment is quickly forthcoming.

If we have customers who are habitually late, but regularly late we just add a few % to their price to make the wait worthwhile. Its usually about 6% which for us adds 30% to the margin. So late payers are good payers.

Just go with the flow, if they screw around with you then screw them back. If they abuse you give a bit of abuse back with higher prices.

 

[lesliedocherty]

I'm not a big fan of sending letters to chase overdue debts unless you are a substantial company happy to put customers on stop if their accounts are unpaid.

I have always found that telephone calls are more productive unless you have hundreds of customers with small balances outstanding

I agree, letters are terrible, a bit weak of you. Telephone call works much better, i'd call them and nicely explain the situation, explain that your are considering withdrawing credit unless it improves, and i'd like to think that from then on, you'll be the 1st to get paid

 

[billmccallum1957]

If your terms are 30 days credit, then stick to it, no payment - no account.

 

[Chris Ashdown]

My son rings up the customers still not paid on payment due date by phone, if they are late paying twice we go pro-forma. not yet lost a customer via this route which we initially thought we would, guess they must like us more than holding onto there cash a bit longer

Often its the accounts department playing around rather than the purchaser

 

[lfw]

A customer who doesn't pay till threatened is probably the most dangerous kind of customer because if they are that short of cash to pay the bills they are the ones likely to fold

yes I agree, it is the writing on the wall they are going to fold. If this is not the case, then maybe by me withdrawing credit terms they will think twice before screwing over other suppliers.

If your terms are 30 days credit, then stick to it, no payment - no account.

simple, I like it.

I agree, letters are terrible, a bit weak of you. Telephone call works much better, i'd call them and nicely explain the situation, explain that your are considering withdrawing credit unless it improves, and i'd like to think that from then on, you'll be the 1st to get paid

I don't have time to waste on these people any more. Perhaps it is weak of me not to chase them on the phone, but I think it is pathetic on their part for me to have to call them. They order goods, they should pay. If a customer expects a phone call in order to pay, go buy somewhere else. I am not going to hold someones hand and walk them thru the paying process. I am being nice and giving them 30 days credit. Take the pi$$ and not even bother to reply to repeated emails asking when payment is expected then don't expect me to bother to offer credit. I don't need these customers on account.

I have now sent out letters saying account is now on a proforma basis due to regular late payments. If they get the warning letter twice and no communication regarding expected payment dates then that is too bad for them, the credit has been revoked.

I have in the past been late paying suppliers, but always call to advise of situation and when they can expect payment.

 

[lesliedocherty]

Gret a grip of yourself man, what a rant, you sound like a wean.

You asked for advice, don't go in a temper when you get advice you don't like.

 

[lfw]

Gret a grip of yourself man, what a rant, you sound like a wean.

You asked for advice, don't go in a temper when you get advice you don't like.

I am happy with all the replies here, grateful for the responses. It is my frustration with the customers that is the problem. Rant is at the late payers not at any poster. Anyway thanks all for replies. Cross at myself for letting it get this far. Taken steps to rectify, simplify the process and move on to less stressful customer relationships. rant over

 

[ethical PR]

Trump lover...I think it's fair enough for the OP to get upset by delayed and non payments and ask for advice on how he can manage this better.

Sounds more like frustration then temper

@lfw I would suggest you credit check your customers and only offer credit to those who are financially stable.

 

[Ian J]

I would suggest you credit check your customers and only offer credit to those who are financially stable.

Late payment isn't necessarily caused by financial instability as many substantial companies (Sainsbury for one) use their suppliers to finance their own businesses.

Some of the older forum members may recall Lord Weinstock in the late sixties and early seventies who was chairman of GEC and was quite upfront about the fact that none of their suppliers would be paid in under 90 days. He built up a massive cash war chest which he used to take over other industrial companies until GEC was the largest industrial conglomerate in the UK - all done with slow payment to suppliers

 

[ethical PR]

I agree @Ian J

However when I ran my agency we found that credit checking customers on a regular basis meant we could spot potential problems at a much earlier stage.

 

[lfw]

@lfw I would suggest you credit check your customers and only offer credit to those who are financially stable.

I did originally credit check these customers, but I have been trading with them for years now and the industry has taken a nose dive. It is only in the last year the payments have become much slower. I can't afford to lose any more money due to customers going into administration. Should I routinely credit check customers if they start to become slow payers?

 

[lfw]

Late payment isn't necessarily caused by financial instability as many substantial companies (Sainsbury for one) use their suppliers to finance their own businesses.

Some of the older forum members may recall Lord Weinstock in the late sixties and early seventies who was chairman of GEC and was quite upfront about the fact that none of their suppliers would be paid in under 90 days. He built up a massive cash war chest which he used to take over other industrial companies until GEC was the largest industrial conglomerate in the UK - all done with slow payment to suppliers

The big boys we supply to are in this boat. I expect this when I supply them. It is when the many small independents delay payment that really hurts the cashflow.

 

[ethical PR]

I did originally credit check these customers, but I have been trading with them for years now and the industry has taken a nose dive. It is only in the last year the payments have become much slower. I can't afford to lose any more money due to customers going into administration. Should I routinely credit check customers if they start to become slow payers?

Well we used to check customers quarterly (we were signed up to a credit check agency) so quite simple to factor this into your finance process (unless you have thousands of customers you extend credit to).

 

[Ian J]

I can't afford to lose any more money due to customers going into administration. Should I routinely credit check customers if they start to become slow payers?

Yes. Companies that habitually pay slowly could be stock piling cash or just have a disorganized accounts department but any slowing down in a company's payments is a warning sign that shouldn't be ignored