PDA

View Full Version : Payment



David Rust
01-10-2013, 7:27 PM
Hi All,

First off, this forum is awesome, quite informative and at times humorous! It has most definitely helped me... so "Thanks" and I hope I can contribute and help others...


I have a question about chasing $$...
I ask this because I have a recent job for a local school system, this is my first job for a school and I was wondering if there are some "rules of thumb" about when to follow up for payment. Do you have different payment expectations based on who your customer is, e.g. Average Joe off the street versus the local school system?

What wisdom can you share!

Cindy Rhoades
01-10-2013, 7:38 PM
Before I accept any job for a "corporation" I find out how they pay for services and the time it takes to process payment. I also email the draft to the person in charge of the ordering and they have to aprove the draft and tell me to go ahead and run it. I keep all corrospndence from and to them so if there is a problem I have documentation. I have never had a problem getting payments on time from anyone. Large quantity orders I usually require at least half down before I will start the job.

Michael Hunter
01-10-2013, 8:01 PM
It's best to put when you expect payment on both your quote and your invoice.

and YES - you should treat different classes of customers differently!

Big firms, schools, churches etc. have problems doing anything outside the system, so you can't expect super-quick payment.
I usually ask for 30 day payment for this type of customer, so long as I have not had to pay out a lot for materials.
I can then start chasing after about 40 days.
Usually they say oops sorry and pay up quickly. Occasionally they say their policy is 60 days, in which case I have to be patient or risk loosing future business.

Smaller businesses have to pay on delivery for their first order. If the payment comes without fuss, then they get 14 or 30 days the next time.

Random phone/email orders have to pay up-front (pro-forma invoice).

Dan Hintz
01-10-2013, 8:25 PM
To add to Michael's comments... consider adding an addendum that specifies a small percentage discount if paid within 15 days or something similar. It doesn't often work with the bigger places, but smaller places love a discount and will usually pay quickly.

Bill Cunningham
01-10-2013, 10:31 PM
Customers off the street pre-pay in cash, internet prepay by visa or interac cash transfer(i give a 2% discount for this..Only available in Canada) Most large companies have a credit card available for purchases, if not I send the bill to the accounts payable people expecting in 30days max I also send a copy to the person that ordered it and make them the point person for payment. If they tell me they pay in 60 or 90 days, I usually say sorry, can't do that. I'm a pre-paid job shop and don't invoice. If I extend them the courtesy of doing the job and sending them the sales bill for payment, I expect the courtesy of prompt payment.. I'm crotchety that way, and have enough business to pick and choose the jobs I do. I'm 66, and I have no intention of being the richest guy in the graveyard, and stress can do that to you.

Chuck Stone
01-10-2013, 11:15 PM
there are different expectations. But I'm a very small hobby business. So I let customers
pay any time they want to.


.. and then I deliver.

Rodne Gold
01-11-2013, 2:14 AM
Casual customers - 50% deposit the rest COD or prepayment , depends on the size of order and what the job is. Anything we make from scratch or that cannot be reused (like taking a plate off a stock trophy) is prepayment in full.
Good customers - COD (if they have not opened an account with us they get NO terms)
Corporate/Govt/Account customers (and we have VICIOUS screening no matter who if you want an acct.) 30 days from statement max .. must provide us with an official purchase order before we start.
No religious org gets an acct - they pay 100% up front...they are the worst for non payment or non collection.
Slow payers get acct facilities rescinded and then its 50% + rest COD

In these tough times , my customers understand the draconian payment terms.
You don't have to feel ashamed for asking for money or think you might lose the job , customers don't expect credit when they go to supermarkets etc , so why should you as a much smaller guy then walmart/whatever be expected to wait for payment?

Joe Pelonio
01-11-2013, 7:55 AM
I had one big customer on net 30 terms, but they moved their AP department back east and were taking 40+ days.
I found out they have a policy to take advantage of any discounts so I offered them Net 30 10% 15 and suddenly was getting paid within 2 weeks. Because of the amounts involved it was worth the loss of 10% to get so much faster cash flow.

Mike Avena
01-11-2013, 8:10 AM
Most of the public schools I deal with issue a purchase order. A PO is sorta like guaranteed payment, because at that point the money is allocated from the budget. It's just a matter of time before they cut a check, most I find pay within 30 days.
I may be wrong, but with a public institution, they are required by state law to pay once the PO is issued, unlike a big corporation.
We discourage terms as much as possible and prefer customers use a credit card. (let them try paying amex late!).
I have always wanted to send customers that ask for a 'credit application' one of those american express applications that you find in a diner lobby...

Mike Null
01-11-2013, 9:11 AM
For me, new customers pay up front; corporate customers get 30 day terms; schools and charities, due on receipt of invoice; small businesses (the worst payers) must pay on delivery; govt. by credit card.

Mark Ross
01-11-2013, 9:46 AM
1. Problem customers who have had payment issues in the past, COD.
2. Bankrupted customers who closed down, changed names and want to continue to do business without paying what is previously owed? No thanks we don't want your business (and yes we have had a couple).
3. Smaller customers Net 30.
4. Medium volume customers Net 60.
5. Large corporations who throw millions our way every year? Net 180. Yup...1/2 a year, its becoming the new "net 60". Of course if the money is tied up for 1/2 a year, our prices reflect it.

Ross Moshinsky
01-11-2013, 10:11 AM
Schools and government organizations typically do a purchase order process. They come in and pick out what they want. We do an estimate. They send a purchase order. We send the purchase order back with a finalized invoice. They pay us in 30 days or less (hopefully). As long as you have a purchase order before the goods leave your store, you will be paid. How long it takes is unknown, but a PO is essentially a promise of payment that is legally binding. If the organization over spent, funding went south, or something simply came up, you might find your way on the bottom of the pile until things are sorted. Depending on the organization, sometimes the treasurer just doesn't know what they are doing and takes a long time to pay. Sometimes they don't want to pay just because they don't want to pay. It's far from a perfect process and sometimes you have to nicely bother them for your money, but as long as you get the PO you should get paid. It is not a good idea to let your product leave without a PO.

As for everyone else, it's a combination of pay in full before you leave, leave a deposit, pay when you pickup, or net 30. With late payers, you have to decide if waiting an extra days or not. We have certain people who pay late, but they pay us after we follow up once or twice. It's far from ideal but sometimes the order is worth the wait.

Glen Monaghan
01-11-2013, 10:24 AM
To add to Dan's comments to Michael's comments, many corporate accounts will insist on a 30 day payment clause but having a small discount for "early" pay sometimes gets quicker payment. However, one of my (former) customers, who was the type to make you nuts by continually changing their minds/requirements and altering schedules at the last minute, always in crisis, drove me to add the opposite - a late payment penalty.

They were notorious for dragging out their payments. Wouldn't do a thing until I contacted them regarding a payment that was a week or three late, at which point they'd "start a ticket", do a "search" and similar crap to delay another 2-3 weeks. So I finally sent them a notice saying that my billing terms were changing with the coming new quarter and I added the late penalty. When they went past the due date as usual, I immediately sent a late penalty notice. The fallout of that was we no longer do business together and it was only after the fact that I realized how glad I was about it!

Phil Thien
01-11-2013, 7:08 PM
Some customers will pay late, and still take the discount. I've had several that, given 2/10 NET 30 terms (so a 2% discount if paid within 10 days, full price if paid after 10 days) will pay in 60 and still take the 2%.

So be careful with the discounts because it can amount to just giving-up 2%. Ask your contact, they may know.

Chuck Stone
01-11-2013, 7:43 PM
Some customers will pay late, and still take the discount. I've had several that, given 2/10 NET 30 terms (so a 2% discount if paid within 10 days, full price if paid after 10 days) will pay in 60 and still take the 2%.

So be careful with the discounts because it can amount to just giving-up 2%. Ask your contact, they may know.

Years ago, the City of Boston hung us up for years. Terms were 10%/10 days, Net 30. They kept the bookkeeper
busy for about 2 years re-sending invoices. They took 5 years to pay, and still took the 10%