Slow Slow paying Customers

[Dean Fowell]

Im sure some one has one slow paying customer who wants there stuff in a hurry but when its time for the bill to get paid they drag there feet, What do you do do you keep doing work for them ? Im thinking about not quoting and doing any work for them at all agian because I have to pay my bills on time.

i guess my question is what do you do in a sitution like this. ??:mad:

[Neil Pabia]

You can always whack them with a late fee. The utility companies have no problems doing that, why can't a small business do it?

[Ross Moshinsky]

Incentive based discounts. Pay in 30 days and you get a discount.
Make it your policy where orders have to be paid in full at the time of pickup.
Keep a credit card on file. If they don't pay, charge their card.
Make sure you have an approved PO before doing the order. Can save 90 days.
Send them to collections (last resort).

[Mike Null]

Anybody who is late must pay up front! None of us have time to spend on collections and almost all engravers I know of charge up front anyway.

With my commercial accounts I do give them terms as long as they pay on time.

[Martin Boekers]

Since the work we do is custom and can't be resold, try to charge a downpayment for what costs you have in it.
That way your covered upfront for that at least. Many shops charge full up front because of the nature of the business.

Only offer quantity discounts to clients if they pay up front.

It's tough to make things work at times. In this economic climate
I wouldn't let the tabs run too high, then it gets dangerous!

A major local beer vendor has a policy that if you are late on a payment or a check bounces once, then you pay in cash
up front from there on out.


Marty

[Larry Bratton]

When people buy off the internet, they pay 100% upfront. I get 50% down with the order and the other 50% before it goes out the door. So I figure I am giving them a break from what they get had they bought it offline.

[Martin Boekers]

I guess the problem occurs more with the commercial accounts than the regular retail.

[Aaron Kitchell]

I would implement progress billing with the material cost paid up front and 25% due once 25% of the work is complete, then 50%, 75% and 100% or you can do materials and 50/50 payment split to reduce the number of payments. This gives you the ability to cover materials, and receive payment on your work as you progress. If they don't pay, it delays the delivery time. If they haven't proven to pay timely, they don't receive the product up front. It's the way every other business operates. Unfortunately as a small business, you likely don't have the resources to run credit checks on each customer, so your "credit check" is based on experience and your experience says bad credit.

[Dean Fowell]

I have to commercial accounts one company the best ever and they also so cut me some slack on my steel I buy for Tags they have 30 days but write a check for me as soon as I ship to them other company they did not even return my call the other day or Email, so i sent a nice nast gram,

[Dee Gallo]

The work I do is all custom and I get paid up front with the mailed-in order or if in person, they can either pay up front or on delivery. No credit cards either. If they want to use PayPal, they must pay the 3% fee. I don't have time to play around with deadbeats or chasing money. I have never gotten burned because if they don't like my terms they don't get their job done with me. This might sound harsh, but it works for me.

~ dee

[Dean Fowell]

I don't have time to play around with deadbeats or chasing money.
~ dee

Im with you on that one Im tired of working all night long to make things happen for people and end up short lol

[Phil Thien]

How long are you giving commercial accounts to pay you? Some can't pay faster than 30-days to save a life.

A few options:

(1) Ask to be paid by CC (if you don't mind giving up the points).

(2) Ask their A/P people to pay you faster as you're a small business and not IBM.

(3) Offer incentives (like discounts, or neat free items) for customers that pay on time or early.

(4) Add some extra to their quote to cover the delay and them being a PITA.

My favorite story is when I was dealing with a local international outfit that hadn't paid me in six months. And I'm doing PC hardware (slim margins). I called them and told them to pay up. My contact said something like, "you know, I'm not going to be able to order so much if you're going to be so demanding." I laughed my you know what off. "Are you threatening to stop stealing my money?" I asked.

Yeah, that was the end of that account. They paid up and moved on.

I couldn't believe when he walked in eight years later and wanted a favor.

[Dean Fowell]

I know Phill,

But we always set the terms for 30 days for big clients if they provide crudentials. They needed another job done small one so my budy did it for me 30 dollars he has not got paid either so I said this customer is yours ,

[Joe Pelonio]

I only gave terms to very regular commercial accounts, most doing a thousand or more a month. Even at net 30 only the first month is tight, after that the checks would roll in regularly. For small jobs even for regulars, commercial or wholesale, either advance payment or when picked up.The only time I ever really got burned was a bankruptcy, when a "regular" opened too many stores and got in over his head. When it's net 30 and it gets to 60 days it's time to worry.

[pete hagan]

I'm with many of you. I have another business where we sell direct and also sell through distribution. My primary distributer got to 120 days on a series of invoices and they lost their distribution margin. Simple economics ruled in that case. I could do the 50K per quarter in multiple shipments including their "RUSH" drop ships and get paid when they felt like it or now I sell to the same end users at retail and get paid before it ships. Plus it eliminated the drop ship orders at reduced margins. I'm through with slow pays.

[John Noell]

We live in the land of resorts. They are infamous for slow payment. They pay everyone slowly. Even if you call the "accountant" and keep after it, four to five months late is not unusual. They almost always pay, eventually. Cash up front? They will just do without if it comes to that. But they do pay, eventually. Sigh.

[Mike Null]

My standard terms are net 30 for commercial accounts and I have quite a number. I have only one that's consistently slow but he always pays. He's offered to pay by cc but I've declined.

I have one account that I do 6 to 20 orders a week. Our agreement is monthly billing and payment on receipt of invoice. That is working well.

[Dan Hintz]

My quotes specify 30 days, as well as a hefty percentage for every 30 days after (starting on day 31)... haven't had to use it yet. I get enough up front to cover materials and a little of my time (amount specified on the quote, usually a percentage), with final payment due on terms. Large orders are split up into multiple payments.

[Larry Edgerton]

I got stuck for #57K five years ago. I am still trying to recover from that one, that is a big number for me. I went to court, but the banks got their money first, and my lein meant diddley. I'm not a big volume contractor, more of a high end low volume, so it is very hard to recover.

Do everything you can to protect yourself, and if you get a bad feeling walk away. I had a bad feeling about this guy, but wanted to keep my crews working. I should have laid them off as it turns out. Now I work alone. Trying to make my life simpler..........

My new policy if I am not comfortable with the customer is figure the job, add 20%, double it and get 50% down. If the job works out well then they get a breakat final payment, if not I am covered.

[Tom Sieczkarek]

I normally due 50% down and balance at time of pickup for most of my larger orders. If a customer needs it in a hurry from me,then I think asking for full payment at completion is not out of the question.

[Rodne Gold]

If they monthly customers , you really only have a slow payment once , we have plenty regulars who take 60-90 days on monthly orders - once it starts rolling , makes very little difference. Occasional customers who are tardy pay a lot more for their jobs , far more than the cost of giving em credit. After 120 days , we go legal and list em on credit bureaus as slow payers

[Ron Hartl]

We do mostly custom work and try to get paid before doing the work. One thing I have noticed, the bigger the rush to get the job done fast, the more likely they will pay slow or not at all.

[Jim Beachler]

With all of my wholesale accounts, I start them off with a CC on file. I do not send the order off unless the card has been ran for the order. After a year of business, they can switch to 30 days, but I still keep the card on file. I have found this solves a lot of problems.

Some people have not been happy but I tell them that it protects them as well. If they are not happy with my work, they can dispute the charge and not pay the CC company. This way the Cc company acts a middleman for me as they will have to have a good reason for disputing the charge.

All of my retail pay up front before I even get started.

[Dean Fowell]

Well I got some inside info I thinkk i will cut them some slack I heard the had trouble paying all there bills miss management , I hope they pull through but if people would contact me im fine
just dont leave me in the dark,

[Bill Jermyn]

Factoring is also an option.

It works like this: A company buys your receivables, the customer pays them directly, and you can draw on the funds before payment is made. If you shop around you can get reasonable rates.

[Belinda Barfield]

Dean,

To answer your question, if they drag their feet I wouldn't keep doing work for them. Place the account on hold until they pay. One thing you will have to understand in Georgia is the "good ol' boy" network. You call to inquire about when you might expect payment and suddenly you and the customer are best buddies. The customer tells you all about how slow business has been, and "hey, you understand, I'll get caught up with you as soon as I can. Let's do lunch next week." The main problem with the good ol' boy network is that good ol' boys get together and they like to talk. That could hurt your business. On the other hand, do you want to keep providing product to someone who potentially can't pay, or is really slow to pay.

I require individuals to pay up front for custom work. Basically, everything we do is custom so for corporate accounts I require a 50% deposit, 50% at the time of delivery. I have one customer who buys raw materials from me, a large corporation, and that account is net 10. They also buy finished product with a 50% deposit, balance net 10.

[Wil Lambert]

You can always whack them with a late fee. The utility companies have no problems doing that, why can't a small business do it?

Easiest thing to do is fire the customer. It's usually not worth the hassle to wait for your money. I have fired a few customers in the past. Actually got rid of one last week. They didn't want to meet my net 30 terms. They decided 60+ was better. I told them either payment up from or I will not do business with them. We are not banks nor should our customers think we are. Wil

[Belinda Barfield]

Well I got some inside info I thinkk i will cut them some slack I heard the had trouble paying all there bills miss management , I hope they pull through but if people would contact me im fine
just dont leave me in the dark,

You are a nicer person than me, Dean. Trouble paying ALL their bills would say to me that the company is having financial difficulty. Having been there, I appreciate your willingness to work with them. Ask if they can make a partial payment.

[Robert Walters]

They may not like it, but I don't think that net 7, 10, or 14 is out of the question these days where BK's are abundant.

else http://www DOT cashcall DOT com/General/Rates.aspx

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[Rodne Gold]

Factoring is real bad , if I get factored , I stop doing business with that person immediately , I firstly think they are in financial trouble and 2ndly I object to my "contract" being changed , I contracted with the supplier and not some financial institution , my details and credit application will also have been given to to the factoring co , I did not agree to that at all!!!

[Mike Null]

Rodney, I agree 100%. Factoring is a red flag if there ever was one.

[Howard Garner]

Other problems with factoring.
If your customer does not pay on time, you need to "buy" the invoice back. Maybe re-factor it for another fee.
Some USA government contracts forbid factoring.
My boss in a microfilm company got caught up in this, left me with over $10k in travel expenses when they went under.

Howard Garner

[Bill Cunningham]

The only credit I give is to municipal/provincial/federal governments. period.. All else are pre-paid. I have turned down jobs that can not issue a company cheque for COD (small amounts up to 1k) and flatly refused orders for companies that want 30 days (which would always turn into 60+) particularly on some jobs that have run 12-15k.. I have no time to chase people for money, or stay up at night wondering how I'm going to pay the bills. I have no desire to be the richest guy in the graveyard.