What do YOU do?

Discussion in 'Accounts & Finance' started by bigmouth241, Sep 20, 2012.

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  1. bigmouth241

    bigmouth241 UKBF Newcomer Free Member

    166 26
    Hi folks,

    At the end of my tether with bloody clients - if only we could be in business without them sometimes!

    Here is an email I got today:-
    Re: last invoice
    I'm having to wait until some more payments come in before we can pay you. Generally I invoice on the 25th month, get the bulk of monies in by 30th month but the rest comes in at different times; so I make all the payments to suppliers that I can between roughly 29th and the 2nd. As soon as some other outstanding payments from customers come in I will make a transfer to you for the last invoice. Sorry we can't pay it at the moment.

    This client has been giving us less & less work each month, reneging on promises & paying slowly for a number of months now, despite having been given preferential terms & a discounted hourly rate. Just feels a little like they're abusing that to the max now.

    What do YOU do with people like this? I've been lenient until now, but it isnt our problem they arent collecting their customers accounts. Technically they're insolvent I guess as the invoice is now 2 weeks past due. Its by no means the biggest one we have outstanding (The big one is £12k!) but every little helps!!

    Getting stressed & just wanted a bit of good old UKBF support & advice ;)
    Posted: Sep 20, 2012 By: bigmouth241 Member since: Oct 15, 2008
  2. chuckles

    chuckles UKBF Ace Full Member

    1,304 225
    No point continuing doing business with them if getting paid is always a problem. Put them on stop and serve them a final notice. If they are in trouble you are in danger of not getting paid and if they are trying it on, you are likely to call their bluff.
    Posted: Sep 20, 2012 By: chuckles Member since: Jun 14, 2012
  3. fathippy

    fathippy UKBF Enthusiast Free Member

    600 94
    I replied to one of these type of posts a while back with my view and got roundly slated, so take it as it is!

    My honest opinion is that 2 weeks overdue is nothing in the big scheme of things. I will happily accept that some businesses are different to others, but even though we nominally operate on 30 days, a lot of customers have drifted to 60 or even 90 days. As long as they pay regularly though I am happy with that. In these times any business is worth pursuing, and dropping customers is probably a last resort.

    On the flip side, at lot of my suppliers have allowed me to lengthen terms, and so it is not a one-way flow.
    Posted: Sep 20, 2012 By: fathippy Member since: Jul 17, 2008
  4. chuckles

    chuckles UKBF Ace Full Member

    1,304 225
    Extending payment terms by agreement is one thing, but when a customer continually reneges on promises, it's not a good sign !
    Posted: Sep 20, 2012 By: chuckles Member since: Jun 14, 2012
  5. Big Pete

    Big Pete Banned

    1,950 415
    Put your prices up to the slow payers .. to make up for the hassles of chasing etc..
    Posted: Sep 20, 2012 By: Big Pete Member since: Oct 13, 2009
  6. PointandStare

    PointandStare UKBF Newcomer Free Member

    940 192
    Collect what's owed and tell them you're not wanting to work with them anymore.
    Either they're a client or a burden - choose which one you want them to be.
    Posted: Sep 20, 2012 By: PointandStare Member since: Apr 20, 2008
  7. NickJ

    NickJ UKBF Enthusiast Free Member

    980 211
    Two weeks overdue? You're lucky!

    If you have already been held to ransom by them, you need to assess who needs who more. That will decide what clients to deal with in future.....
    Posted: Sep 21, 2012 By: NickJ Member since: Mar 29, 2012
  8. SBlundell

    SBlundell UKBF Enthusiast Full Member - Verified Business

    752 185
    Two alternative thoughts for you:

    1 - Rather than point blank stopping business with them, explain that you are concerned about the increasing payment lag times & henceforth all future orders will be cash up front only, or 50% on order or whatever you choose thereto. Ok you may lose them for upsetting them, but better than point blank refusal & definitely losing them?

    2 - Depending how receptive they're likely to be, how about putting your prices up a little & then offering 2 - 5% prompt payment discount to encourage payment on time. Even without putting prices up you're probably no worse off for having the money in now rather than x weeks later......

    Food for thought, not necessarily 'do these' advice :).
    Posted: Sep 21, 2012 By: SBlundell Member since: Aug 10, 2011
  9. patientlady

    patientlady UKBF Ace Free Member

    1,435 281
    Unfortunately I think that with business the effort for collecting payment is not treated with the priority it deserves.
    An invoice is raised and then, most likely forgotten until it becomes overdue! Once a company is given credit and then allowed to go over its credit terms they then know it will be given.
    If the company had been called say 5 days before the payment was due as a gentle reminder, they would understand more fully your terms.
    It can be hard for small business to chase money but if called earlier or even visited to collect a cheque your customer may offer more respect and even use your efficiency for there own business;)
    Posted: Sep 21, 2012 By: patientlady Member since: Aug 25, 2009
  10. Alan R Price

    Alan R Price UKBF Newcomer Free Member

    2,123 1,037
    You need to determine if they are "can't pays" or "won't pays". If you have previously been working happily with them it is likely to be the former. This would be borne out by the fact that they are putting less work your way, which may well be a sign their turnover is dropping. In this case, their problem is your problem. Either you try to work with them to resolve it, if you value them as customers and think they might be a valuable source of work in the future; or you put them on stop or COD while they settle their debt to you. If they will open up and share their problems with you, you might feel more inclined to help them out; but in any event you need to restrict your future exposure by reducing or curtailing future credit.

    If they are "won't pays", go in hard with a statutory demand under the Insolvency Act. This will normally flush out the ones that are playing games.
    Posted: Sep 26, 2012 By: Alan R Price Member since: Jul 5, 2010
  11. goldenquest

    goldenquest UKBF Newcomer Free Member

    48 6
    We do this...

    There are some clients that are just a nightmare to work with - you know the kind. Ones who make things difficult, create problems, never pay on time, and so on.

    So, we decided to charge those clients more. There's only one or two, and they get charged about 20% more, but with exactly the same attention to detail and commitment at our end. If they decide to go elsewhere, no big loss. However, if they decide to keep using us then at least it's worth our while. They haven't left us yet, and that's been happening for a couple of years :)
    Posted: Sep 27, 2012 By: goldenquest Member since: Jun 8, 2010
  12. Alan R Price

    Alan R Price UKBF Newcomer Free Member

    2,123 1,037
    A useful thing to do for any business is to assess all its clients and grade them A to D, depending on how easy they are to deal with. The Ds are usually the ones who pay slowest, complain about price and moan about quality even when there are no real grounds to. They take up most of your time and prevent you from concentrating on the more profitable areas of your business. The As are where you make most money for least effort.

    Then take a big breath. . . and sack all the Ds. You don't need them. They don't make you any money and just get you chasing your tail. Let one of your competitors take them on and inherit the loss you have been making on them.

    Then increase the prices to all the Cs. They probably won't complain and if they don't like it and some leave, enough will stay with you to replace any profit you lose from those who leave - and you will make the same money for less effort!

    Show how much you value your A and B customers with little rewards and incentives that don't cost much but make them feel valued ("critical non-essentials"), such as sending them a birthday card or treating them every now and again; or ringing them personally to ensure an order has been delivered OK and that they are happy with the service you have given.

    Giving excellent customer service to those who really appreciate it will normally help any business grow.
    Last edited: Sep 27, 2012
    Posted: Sep 27, 2012 By: Alan R Price Member since: Jul 5, 2010
  13. paulstewart64

    paulstewart64 UKBF Newcomer Free Member

    181 31
    The good thing about this forum are the numerous views from experienced business owners. So much good advice here.

    You do have a number of options here.

    1) Either go and see the client and find out what's happening. you may also find there are other problems in the business which means you have identified early warning signs they are in trouble. It could be there are problems which you could solve together, create a greater working relationship and therefore mutually benefit.

    2) Decide that you will withdraw your services on a stage basis or immediate. After all, they don't deserve to be a customer if they don't respect your payment terms.

    3) Take some of the harder action alread described, although this can work for you and against you in terms of getting the money paid and your reputation in the market.

    If it's any good to you, I made the mistake of not taking action soon enough and ended up with a bad debt of £7,000. - NEVER again.
    Posted: Sep 28, 2012 By: paulstewart64 Member since: Jul 16, 2012
  14. Spongebob

    Spongebob UKBF Ace Free Member

    2,192 1,105
    Excellent advice from Alan.

    Since I downscaled my business operations, reduced my staffing levels from 12 to just me, and concentrated solely on the 'A' class customers my income has increased by over 200% and I work half as many hours.
    Posted: Sep 28, 2012 By: Spongebob Member since: Dec 9, 2008
  15. Bob

    Bob UKBF Big Shot Free Member

    3,668 929
    Slightly off topic but I was on a course a few years ago run by one of the firms that "provide proactive support coaching and advice" to accountancy firms with a view to the firms' improving their profit per partner.

    As Alan has said, they promoted the idea of classifying their clients and dumping the "D" clients.

    They also liked titles for staff to make them feel important and valued. For instance the receptionist became the "Director of First Impressions".

    They had one other idea for motivating the firm's staff. Staff meeting every month and one of the agenda items was to vote for the client that the staff disliked acting for the most. The client was then contacted and advised that the firm could no longer act for them and, if they asked why, they should be told that it was the result of a staff vote, Apparently this was supposed to improve staff morale and in turn profitability.
    Posted: Sep 28, 2012 By: Bob Member since: Jul 24, 2009
  16. Alan R Price

    Alan R Price UKBF Newcomer Free Member

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    Posted: Oct 1, 2012 By: Alan R Price Member since: Jul 5, 2010
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