I put 15 days terms on my invoices and then if they haven't paid after a month I send a statement. I now have a few that haven't paid despite receiving a statement so after another week I have sent an email asking for the money. No luck in one case.
I'm hacked off because this one in particular is a big invoice and there's no reason for him not to have paid. As far as I could see from doing his bookkeeping he pays other stuff pretty much on time. He emailed me a week ago to say he'd pay the next day and bring me more work this week but I've heard nothing and received nothing despite the follow up email yesterday.
How do you deal with these people? How often to you hassle them and after how long? What do you say to them?
Hassle him as much as you can. Do you like working for him is the question and has he always paid on time before this occasion? I would personally send a statement out as soon as 15 days are up and not wait for the month to be up, that way they will realise you mean business.
What about sending him a new invoice with interest added on for late payment do you think that might work?
Had a thought, is he VAT reg, if so do what Mark says and don't work for him anymore until he has paid and if he is Vat reg then he will risk his next Vat return going in late. At the end of the day it will be his fault and not yours.
I agree with Mark moving forward set him up on a standing order.
In the real world, sometimes you have to wait to get paid. Most companies expect it and have reserves to cope. But you should never have to wait much more than a month, especially if you are a small business, as in your case. Those companies I mentioned also employ credit controllers to chase outstanding debts the moment they are due for payment, so don't worry about chasing too soon. You could even issue a polite reminder on the due date if a bill is outstanding. If this behaviour is deliberate on your client's behalf, it is deplorable and you should not be reticent in showing your feelings. It's not nice to be taken advantage of.
Amanda and Mark have both given good advice: chase the money hard - it's yours now, not his. As Amanda said, you may be able to charge interest (plus costs for collecting the debt). You can point this out to him. Also, you should insist on the monthly payments Mark suggested being paid in advance from now on (even if that means a periodic adjusting invoice/credit note to deal with under/overpayments) because your client has let you down and damaged the trust there should be between you.
What should you say? First time: ... I notice the bill is still outstanding ... You probably won't need to add ... and I was wondering when to expect your payment. He'll say he'll get right onto it. (But if he says something about delaying it, you will have to say that this could make it difficult for you to come in next week/continue providing support.)
2nd time: ... We spoke last week about your overdue account and you promised payment by <date>. I can't trace having received it. Has there been a problem? He'll say he'll get right onto it. (But if he says there has been a problem, ask him to explain and point out that it would have been helpful if he had mentioned it sooner. It's up to you how you deal with the problem)
3rd time: ... if you get to this point, you should be writing a formal letter saying when you expect him to clear his debt, and reserving your right to take further action if the deadline is not met.
Other people will have their own variations of the above, but, essentially, they will all be doing something like this.
He's a new client and going forwards it will be a monthly bookkeeping job so I can do what you are suggesting ie not do the next month until he pays. But on this occasion he needed a year's worth doing and passing onto his accountant to get his annual accounts done on time. So I dropped everything to do it given that it's ongoing work and a growing business. He didn't seem like the type not to pay. He's not a dodgy builder type of client and I had a discussion with him about paying on time when I took him on! I will leave it till Monday and then will phone him. Speaking in person might add to his guilt.
It's good to know that the general opinion is that I shouldn't be polite about this and keep waiting. If it was a smaller bill I might be a bit more flexible but it's not insignificant and I have a mortgage to pay!
This might all come down to how valuable your relationship is with the accountant. It doesn't yet indicate to me that your original impressions were wrong. If he is eager to have monthly bookkeeping, then, going forward, I would bend to 30 day terms which are more usual.
One larger job can usually be done cheaper than 3 monthly ones. After he has paid, find out if he'd prefer quarterly and give him a revised quote which will depend on 'Payment On Delivery'. Put 'statutory interest chargeable' on the invoice terms. That might be easier than trying to build 90 days interest into the fee. The main thing is not to alienate both relationships.
Thanks for all your comments. I will call him tomorrow. I hope me on the phone will be harder to avoid than an email he can just ignore. I don't like asking people for money (even though I know I have done the work and am justified) so I wish these people would just pay!
Its always hard asking for money that is owed to you, but at the end of the day you have earnt it so they should pay. I use to dread asking people, but then once I did credit control for about 15 months as part of my job I had to get over the initial worry and get on with it. The company I worked for got all their money in in the end, it was hard going but worth it. So now if its me I am a little bit harder, touch wood I don't have any bad debts.
Yey, he paid! Was very apologetic and did it immediately. So why didn't he do it before when I emailed him?! Only one more overdue one to go and I'm seeing that one this afternoon with the next invoice!
Yey, he paid! Was very apologetic and did it immediately. So why didn't he do it before when I emailed him?!
Well, it might have been because you were not holding him upside down by his ankles from the upstairs of a multi story car park at that time.
People scorn my debt collection techniques but they get results.
seriously though, well done on getting the payment.
Sure that after you've seen the other one it will be off to the bank for a stack of standing order forms.
all the best,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Other one is paying this afternoon apparently. Standing orders - I'm not sure about them really. I understand the reasoning but I'm not sure how motivated I'd be to do the work if the money was already in my bank account. There's something rewarding about finishing a job, issuing the invoice and getting paid. I'm just going to have to learn how to control the clients better I think.
Trying to remember from my AAT Debt Control Studies, I think that somewhere there was a note about giving them a small discount e.g. 2% if they pay by direct debit.
This of course being the case of regular work.
I hope this helps a bit.
Adrian
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What about a direct debit then? I bill all my regualar clients using monthly direct debits and one off jobs I get at least 40% up front. Knowing I don't need to chase loads of money motivates me. There's also the cost of chasing debt to add.
In a previous existence, I made enquiries about obtaininng direct debit authorities from regular-payment clients and I was told that my company would have to give an indemnity for a collossal amount ... hundreds of thousands if I recall correctly.
Was I misinformed ... or have things changed (it was back in the 70's)? More importantly, what's the procedure now?
Absolute nonsense, I have no more clients than the average bookkeeper. I use a service called gocardless, and anyone can. They charge 1% of the transaction which is cheaper than most.
It's all about keeping up to date with the fast moving pace of technology. Joanne, don't assume that people mean other than they say or you may not find out anything you don't already know.
Kris
-- Edited by kjmcculloch83 on Thursday 11th of July 2013 10:30:40 AM
but to be fair direct debits and standing orders paid into bank accounts when set up through the bank are often free.
Setting up a standing order is easy but as Joanne mentions there are issues with setting up direct debits through traditional channels.
As you mention, for a price there are companies out there who can enable you to circumvent this. |The way that I've seen this sort of thing working before is by these companies setting up the direct debit through them to their bank and then they do a straight transfer to your bank. But like everything it comes at a cost and it is down to us to decide whether such is worth it.
lol, almost feels like money laundering when you say it like that doesn't it.
I'm not saying that one is the right way and the other wrong. I'm just saying that there are different perspectives to this.
I also think that natural reaction of people is to assume (unless told otherwise) that when we talk about standing orders and direct debits we are talking about such being set up directly with our own banks rather than employing third party services.
Like Joanne I too assumed that people in this thread were confusing standing order and direct debits which is very easy to do.
kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
