our customers are all B2B and most, if not all have paid late over the last 12 months some 2 months others upto 4 months
my problem is if i charge them 100.00+VAT per month on a 1200.00 contract for ( grounds maintenance )
do i send another invoice for 40.00 late payment or include the charge on the next invoice and hope it does not get sent back
And you haven't been paid on the contract you've been writing about since November. It's now March and it's time for action; not just on these invoices but on your whole approach to credit management.
You're hurting right now as you are effectively financing the operations of several large clients. But you are going to be hurting a whole lot more when one of them falls over on you.
There's some good ideas on this thread. They need to be brought together in a holistic solution. I've talked about fiddling around with just a couple of aspects of your standard contract but having re-read the whole thread, this is only part of the solution.
What I believe you need is the means to gradually educate all your clients to pay on time, not at an average of what must be 60-90 days late. If you can do this, it will have a massive impact on your cash flow and on your business.
I suggest an overhaul of all your terms and also of your client documentation which should be clearly linked to the former so that you create legally-enforceable contracts with clients.
Then I suggest that you need an overhaul of the way you engage clients in the first place; how you choose them, how you evaluate them as a credit risk; how you identify and avoid the bad boys, and how you share your rules of your business game with them.
Then as other have suggested, you need to review how engage with your clients when their invoices are due for payment. Specifically, you need to gently introduce the fact that you're signed up to a Credit Management company like ourselves or GRD who are pressurizing you to take over the debt. Then it looks like you have nothing to do with it! Start off chasing at no later than 7 days overdue and then ramp it up, step by step at pre-defined intervals until you're really leveraging some of the harder-hitting clauses in your new terms.. and I'm not just talking about late payment interest. If you can't afford the time to do this yourself, then we'll train someone up in your office free of charge.
This will be enough to get the vast majority of your debts paid a LOT sooner than 90 days AND you get to keep your clients.
Some will fall through the net though. So at no later than 28 days overdue hand these over to the professionals for collection knowing that your debtor will pay the costs of collection. We love chasing big debtors especially when the directors are screaming down the phone asking why we have written to their home address.
With all the advice you've had from some great guys and gals on this thread, we really do have the means on this forum to seriously combat late payment at modest cost.
What are you waiting for?
Best Regards
