Afternoon,

I have a bunch of usual suspects where payment for work is taking longer and longer to receive. I should really refuse to deal with them until the debts are cleared, but at the same time do not want to jeopardise any future business opportunities with them. I’ve been and seen them had ‘the chat’ and whilst i’m being assured that they are financially sound i still aint being paid!

Does anyone else have these sorts of customers where it is literally like getting blood from a stone? What do you do with them? I’ve even been considering looking for some kind of insurance on bad debtors!

Any thoughts?!?

Too many potential customers who will pay on time to worry about the future business of those that won’t. Simple as.

Rachel

Been in similar position and all that happened was the debt increased, I’m still owed money and refusing to work for them. I suspect I will be left with a big debt.

No pay no play would be my advice. We were given stage payments would then do more work on the promise of more money but all that ever happened was the increase of my overdraft.

https://en.wikipedia.org/wiki/Dunning_(process)

+

Threaten with…

https://www.gov.uk/late-commercial-payments-interest-debt-recovery/when-a-payment-becomes-late

They will either use your services again (i.e. pay up) or you can issue a winding up notice eventually (always lots of fun 🙁 )

If it’s getting longer and longer the alarm bells should be going off.

I would start to put the daily calls in and sending letters. The hassle factor is one of your only weapons. Ultimately you have to stop working for these people but id try and get the debt down before you fall out completely.

I should really refuse to deal with them until the debts are cleared, but at the same time do not want to jeopardise any future business opportunities with them

Why would you care about jeopardising future business with clients who don’t pay? Do you like working for free?

No wonder they aren’t paying you, they’ve got you over a barrel. If I were you I’d tell them to GTF over any future work they want doing.

Main thing I’ve learned in last 3 years is never be further ahead in terms of work done to invoices paid than that which you are prepared to write-off.

I set reasonable expectations that payments begin early. I just won’t work more than a few weeks without beginning to see a pattern of payment.

Rachel

A sale with other payment isn’t a sale.
If the debt to is significant then sell it to a factoring co.
And then look for new customers.

This chap has a good idea. Caution, it’s quite sweary

I just add 10% onto the fee quote if they have a history of being a bit slow paying and / or want payment terms of more than 30 days. You could also look at invoice financing any future bills.

I have had this in the past and now operate a strict payment-up-front policy with the pisstakers. They complain of course and mutter about “cashflow” but funnily enough the money suddenly becomes available when they are desperate to get stuff done. Even if they decide to go elsewhere that is a result in my book as then worrying about not getting paid becomes someone else’s problem.

I just add 10% onto the fee quote if they have a history of being a bit slow paying and / or want payment terms of more than 30 days.

sometimes I do this too as a “softer” version of requesting payment up front (it’s a lot more than 10% extra though!)

Not sure what the value of the unpaid debt is but you could use one of the companies that you sell your unpaid invoice to. They then chase for payment and pay you a certain % up front. A number of smaller manufacturing companies we use, follow this route and we then just pay the credit company

http://www.mycreditcontrollers.co.uk/overdue_invoice_business_debt_collection_service_CreditXS.html?gclid=CIfh89C74c0CFRSeGwodobUBEw

https://www.marketinvoice.com/financing/invoice-financing-c?campaignid=227401645&keyword=%2Bsell%20%2Bunpaid%20%2Binvoice&matchtype=b&gclid=CIqV5JO84c0CFRUW0wode_IFsA

In our place the boss has to get onto the phone, usually a week before wages are due or our major supplier wants paying. Our clients tend to dwarf us in size and we, well he, has a good enough relationship with the boss at the other end to call them and remind them we’re not some multinational that also “plays the game” and could they pay us and they usually do, or 90% of them do.

The rest we have to “put on stop” we don’t lift a finger or supply them with a thing until they’re up to date – we can, if we wish hold them by the balls doing this as we’re IT support and 2-3 times in the last 3 years we’ve had business with a complete outage on the phone shouting at us and we’ve been able to say “sorry, you have to pay first”.

Also in the past we’ve sacked clients it’s usually down to a number of factors, but invariably the ones who refuse to invest in usable kit are the same ones who pay late, or not at all and then take advantage of our unlimited service to keep an out-dated, worn out IT system going – it’s not a hard calculation to work out if they’re profitable to us or not and there’s also a ‘disaster factor’ if they suffer a major server failure etc., we could need to put a couple of Technicians on site for days on end to try to fix it – costs us an absolute fortune, zero cost to them – better to get rid of bad payers who under invest.
In the past we’d ‘joked’ about remotely turning off bad clients servers, internet connections, even websites and demanding payment to ‘fix’ them – like Ransomware – but we’d never do it.

Other than that you can pay a collections agency to do your dirty work, they seem to work by phoning the main switch board and asking whoever answers to put them through to the boss about outstanding bills etc. and shame them into it.

Or Invoice Discounting, wouldn’t recommend it unless you have to.

Ferris you have to proactively chase them and remind them of the contract terms. Ultimately you have to use some kind of stick like threatening to move to (say) 1 month payment not 3 and/or tell them you are too busy for their next piece of work (as you have new clients who pay on time). If the client can squeeze you like this with impunity it will never end.

I’d suggest using a factoring company.

When I was involved in a tiny startup years ago, that’s what we did. We used a part of Lloyd’s, percentage they took was well worth it, allowing us to do our core sales work rather than try to be credit control as well. I know of at least one occasion they rolled out the attack dogs on a late payer – we probably wouldn’t have had the same leverage.

We have a few like that (telecoms provider).

They get two months to pay their invoices (if not paying by DD), then service suspension (assuming they dont get in contact first), if they dont pay a week after that, services ceased, numbers gone. Off to debt recovery you go.
Our payment terms are two weeks from receipt of invoice, so I think we’re probably quite generous.

THIS IS STW!!!

Very few genuine reasons for work being delayed further than they usually do. This is normally down to cash flow so you are being used to finance their business.
If you want to keep the business then write to them stating that you will extend your normal credit terms to X days as good will for the next 3 (or 6 if you’re feeling generous) months. Failure to pay within these extended terms and you will have to place their account on stop and no further work will be done until the terms have been adhered to.
Insurance and factoring won’t help you as they normally require that the accounts are paid on time and will on insure you against the risk of failed payments within these terms. Continue to supply the customer when they have paid you and you’re exposing the underwriter to additional risk that wouldn’t agree so you still be out of pocket and paid for insurance on top.
Factoring will only advance you a portion of the invoice value and then chase payment from the customer up to a set period i.e 60 days, after that they will take back the money they had advanced you on the invoice. Again you end worse of because you still haven’t been paid and had factoring costs on top. If you’re on cash accounting then you pay the VAT over when you receive the advance payment from the factoring company which doesn’t help you cash flow if the invoice isn’t collected.

The place I work pisses me off with the way they do payments (our used to at least, it may have improved the last couple of years), our standard terms are 45 days which straight away means any new suppliers I deal with I have to get them to agree to (rather than the usual 45 days) and even then it can be 60 days before payment goes through sometimes. And we’re a global company with billions in revenue and hundreds of millions in the bank yet they still take the piss.

I guess the logic is it all adds up (i.e. if you delay paying £20,000,000 for a month it’s actually a sizeable amount you gain in interest). But it’s me that ends up over a barrel when we need a favour from the suppliers (e.g. deliver a server in 5 days or provide us loan equipment etc.). Ofc I guess a lot of clients don’t pay us promptly so what goes around comes around but it’s a crappy business practice all the same.

We have some great customers, we don’t do work for non payers.
I told a company last week that they could settle their bill and go elsewhere next time.
I have since heard from another company who deal with the same customer that they have gone through several sign companies like us and have been the same with all of them.
The boss of the company is a total Prat, has no respect for anyone, we are better off without them.
Let one of our competitors deal with it.
We have noticed that the payment terms of some of the larger multinationals has improved, some used to be 90 days back in the 90’s!