Late payment of invoices

Sportsman

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I am sure there are many on here with similar problems.
The nature of our business dictates that we offer 30 day interest free credit to our customers and, to be fair, the majority accepts this and pay on time.
We understand that in some cases cash flow problems might dictate payment will be a bit delayed and don't really have a problem because we are confident that we will get paid before long. We have a few customers where we expect payment to be delayed, but who always pay eventually, usually when they want to place another order. I look upon this as a form of saving, if I haven't got it, I can't spend it.
Then we get the ones who can pay, but don't want to, at least, until they absolutely have to. I have noticed that the larger the business the more likely they are to fall into this category.
The worst offenders by far though are Government/NHS/Local Authorities. These will generally go through central payment departments that cover many different areas and it seems their mission to intentionally delay payment by any means possible. As an example, back in April we had an order from a London Borough. We were furnished with a purchase order number which we put on our invoice. After a few weeks we were informed that the purchase order was incorrect and we were given a new one and resubmitted the invoice. We have now had to do the same thing a total of 4 times. This morning we received the email for the 5th time, that the PO no. was incorrect, please rectify and re submit. On each occasion the Email was from the same person in central payments and was an identical copy of the one preceding it, which suggests that this is a standard response to requests for payment.
Any suggestions for strategies to collect payment from an outfit that just does not want to pay? Letters, legal threats etc. are ineffective. If it involves broken bones, I am not really up to that these days, but any other suggestions are welcome. :mad:
TBH I don't really expect an instant solution, I just needed to vent. I will just put them on the list of those who pay up front.:(
 

Gaz9243

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Rather than email, ring and speak to the person as high up as you can, if that fails then give it to a professional debt recovery company, Euler Hermes it STA international are two I have used, both got the money quickly.
 

Blanks

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I have had nearly thirty years of putting up with late payment of invoices and so called govt action has done little to help. To be fair I stopped working for most of the bad payers and kept the good ones, although in the early days I did not have that luxury as I needed every bit of work I could get.
I laugh when those on paye get jealous of the self employed, if only they knew how much unpaid work and chasing up goes on, scandal really in this day and age.
 

Neil ofthe nene

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1. Don't accept business from them.

2. Report this to their internal fraud department as this may be a sign of internal fraud by the person concerned.

3. Advise others in your line of business of this poor payer so they don't accept business either.


On this sort of line I came across an amusing scenario in my days in branch banking. Someone in the banks head office, in their infinite wisdom, instructed branches to delay paying invoices for 30 days. One of my managers summoned in a tradesman customer for a chat with him about his overdraft. The tradesman informed the manager that if the branch had paid him promptly for work he had done for us then he wouldn't need the overdraft. Result? One red faced manager and an instruction to pay invoices promptly.

When I joined the cheque clearing arm of the bank I learned that the major supermarkets maintained a lot of their accounts in Scotland. I asked why this was. The reason , it turned out, was that as cheques took an extra day to clear when drawn in Scotland it meant that when paying suppliers the supermarket could keep the money on deposit an extra day and earn an extra day's interest. Cheques to suppliers tended to be in the hundreds of thousands.
 

corkycat

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One solution may be Factoring, where a company will take on the debt - and the risk of non-payment - thus guaranteeing all our invoices are settled within 30 days. The downside of course is that the Factoring company takes a percentage of your income. For some, it works, for others it is a no-no. I suppose it is a question of balance; would the money you pay for factoring offset the cashflow pain you are suffering from non-payment?
 

tipitinmick

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Oh I’m glad I’ve retired. Not a month went by that I wasnt chasing money. Extra over and day works were the worst. Contract work not too much of a problem but, extras and day works was always a nightmare. The nature of the beast. When I hung my pliers up for the last time some organisations were wanting to move invoicing from one month to three. Sod that. Good luck mate. 👍
 

spanky

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Do you have an interest clause in the contract? This is standard with some companies I work with at about 2% per month for late payment. Might be worth inserting this as a way to cover some of the late payment and make sure the wording is clear that it is from the day of original invoice to stop them weaseling out of it and resetting the clock each time.

Generally I've found the medium-large companies are reasonable at payments. The worst I've found so far are French and Italian companies that regard 30 days payment terms to mean 90 days by default... you really have to chase them.

One large US company I dealt with actually paid early (in just a few days from invoicing)... hidden away in the small print was a phrase that an early payment would mean a 2% discount! Needless to say I will be slightly padding future invoices for them to compensate.

As for government etc. I generally steer clear. We did a small piece of work for one on a verbal agreement (was under the purchase review threshold) and then they wrapped the whole thing up in red tape and refused to pay. In the end it was just not worth the effort to chase, but I wont be working with the group ever again.
 

160642fishing

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When I worked as a clothing rep I was tasked with trying to sell Tescos trousers as we were desperate for production,my boss gave me an absolute base price that I couldn't go below,our terms were payment in 30 days,Tescos buyer scewed the price down to below my price,casually informed me that we had to pay for their van to pick them up,their garment tickets and if there was one pair short in the order when they came to pick them up the van would leave and come back when the order as complete,but he did say Tescos paid within seven days,needless to say we didn't do business with them.
 

Neil ofthe nene

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Do you have an interest clause in the contract? This is standard with some companies I work with at about 2% per month for late payment. Might be worth inserting this as a way to cover some of the late payment and make sure the wording is clear that it is from the day of original invoice to stop them weaseling out of it and resetting the clock each time.

Generally I've found the medium-large companies are reasonable at payments. The worst I've found so far are French and Italian companies that regard 30 days payment terms to mean 90 days by default... you really have to chase them.

One large US company I dealt with actually paid early (in just a few days from invoicing)... hidden away in the small print was a phrase that an early payment would mean a 2% discount! Needless to say I will be slightly padding future invoices for them to compensate.

As for government etc. I generally steer clear. We did a small piece of work for one on a verbal agreement (was under the purchase review threshold) and then they wrapped the whole thing up in red tape and refused to pay. In the end it was just not worth the effort to chase, but I wont be working with the group ever again.

One thing to remember is that if offering credit you may need the appropriate licence. I am not sure if a council would be classed as an unincorporated association.

https://www.gov.uk/offering-credit-consumers-law
 

Sportsman

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That's interesting to know Neil. I am sure that I am not the only person to be unaware of that. Maybe I am, I am always the last to know anything these days. :(

@spanky. I have tried adding statutory interest to the outstanding amounts, but no one has ever paid it and the amounts involved have been so small it has not been worth pursuing them.
 

emmaemma

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we have had a couple of government contracts, and the amount of paperwork and red tape and the chasing of payments has made it not worthwhile. We now don't quote as it's not worth the hassle....
 

Arfer Mo

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I had one occasion where I was being messed about by a manager regarding payment so I went onto Companies House website and looked up the home addresses of two of the directors of the business concerned. I sent each of them a letter to their home address apologising for having to do that but explaining why. I received the cheque within a few days.
 

Ken the Pacman

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Bump your prices up by 5 or 10% with a corresponding discount for payment within your terms or nett for any later payments.
Seems to work for several of the tackle firms
 

MartinWY

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I am sure there are many on here with similar problems.
The nature of our business dictates that we offer 30 day interest free credit to our customers and, to be fair, the majority accepts this and pay on time.
We understand that in some cases cash flow problems might dictate payment will be a bit delayed and don't really have a problem because we are confident that we will get paid before long. We have a few customers where we expect payment to be delayed, but who always pay eventually, usually when they want to place another order. I look upon this as a form of saving, if I haven't got it, I can't spend it.
Then we get the ones who can pay, but don't want to, at least, until they absolutely have to. I have noticed that the larger the business the more likely they are to fall into this category.
The worst offenders by far though are Government/NHS/Local Authorities. These will generally go through central payment departments that cover many different areas and it seems their mission to intentionally delay payment by any means possible. As an example, back in April we had an order from a London Borough. We were furnished with a purchase order number which we put on our invoice. After a few weeks we were informed that the purchase order was incorrect and we were given a new one and resubmitted the invoice. We have now had to do the same thing a total of 4 times. This morning we received the email for the 5th time, that the PO no. was incorrect, please rectify and re submit. On each occasion the Email was from the same person in central payments and was an identical copy of the one preceding it, which suggests that this is a standard response to requests for payment.
Any suggestions for strategies to collect payment from an outfit that just does not want to pay? Letters, legal threats etc. are ineffective. If it involves broken bones, I am not really up to that these days, but any other suggestions are welcome. :mad:
TBH I don't really expect an instant solution, I just needed to vent. I will just put them on the list of those who pay up front.:(

To offer a meaningful response I'd need a lot more information, but what you are describing is of course very common. We changed our model a few years ago and now most small business and private customers are required to remit fees up front. We sometimes allow staged payments, depending on the client and their specific needs. Yes, up front payment has undoubtedly has put off a few potential customers, but we are well enough established in our field that it makes me think they would have been poor payers, had we offered terms.

Our view is that if you're a customer dealing with someone working from a bedroom whos asking for payment up front then yes, be cautious, but if its a firm trading for 30 odd years with a large portfolio of blue chip clients who are also professionally registered, regulated in a meaningful way and insured, then theres no real reason not to, unless you're up to something sinister.

If we do offer terms, we credit check. No exceptions, been caught out with that one.

One advantage we do have is that generally speaking, the work we produce for clients is subject to copyright law, which means that if they dont pay, they have no rights to use the information we provided them with. We can and do enforce this, but fortunately we don't have to follow through in that way very often.

We have clients, mostly larger ones, who think 30 day terms mean 90 and are fully aware of their percentage contribution to our turnover. Again, its something we watch for and we are looking into establishing retainers, to help offset the cost of the additional days and balance cash flow for larger accounts.

Happy to chat in private if you wish. We're in professional services, if that is relevant to your sector.
 

MartinWY

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As an example, back in April we had an order from a London Borough. We were furnished with a purchase order number which we put on our invoice. After a few weeks we were informed that the purchase order was incorrect and we were given a new one and resubmitted the invoice. We have now had to do the same thing a total of 4 times. This morning we received the email for the 5th time, that the PO no. was incorrect, please rectify and re submit. On each occasion the Email was from the same person in central payments and was an identical copy of the one preceding it, which suggests that this is a standard response to requests for payment.

In this specific instance, if you are certain you are correct and can prove it if asked, then invoice them hourly for both directors time and your accountants/bookeepers time in dealing with each of these instances. Itemise everything and be accurate with your records and time logging. Charge fairly by quarter hour for telephone calls and emails. Then add VAT if appropriate and issue it with no terms but importantly, with a specific payment deadling for both outstanding amounts. Giving a specific date and warning of further action to recover the debt is very important. I would suggest giving them 2 weeks to pay both amounts, as it would be reasonable. Always be reasonable, because thats what magistrates are looking for.

If they do not pay, depending on the amount of the original debt, look at small claims court. You do not need a lawyer for small claims if you keep accurate records and you know that you've done what the contract demanded without complaint from the client.

Alternatively, there is mediation. A request from a mediator may be enough to get a manager to approve payment of both amounts.

You shouldn't be out of pocket for these situations, so make sure you aren't. I doubt they would take you off their service provider list even if it went to court, providing you're entirely in the right and have proof.

In other words, stand your ground but don't shaft them either. Just pursue what you are entitled to, which is more than the original debt.

Edit: Don't hang about too long on this. Councils can become insolvent, particularly at the moment and if they do, you'll get nothing.

Edit again: I'd personally consider that a request for a PO number amendment does not amount to the client disputing the debt, which also goes in your favour. It also adds weight to your case that you've incurred costs as a result of their error, justifying a further invoice.
 
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