Bad payers

[Covenant]

I have been self employed for about six months now and its not gone too badly but it really bugs me when people dont pay on time. I only have a few clients-I dont want to upset people who are regular customers by not being available.
One client who is supposed to pay on 28 days offered the excuse that he didn't submit his invoice (to his client) until two weeks after mine. Why should I have to listen to excuses about his business methods when my contract is with him?
Its really difficult to be pleasant to people who know you need them yet abuse your business relationship.
How can you get through to them without loosing their custom?

[smurfbrain]

The best way for me (not bulletproof) is to have set time(28days) clearly printed on an invoice(in which you are expected to be paid) followed by a statement that reminders will be send out in a third, fourth week. Direct phonecall asking if they had sent you a cheque after previous step is in order. Tbh over time some bad apples pop up. Its not unusual to wait up to three months to get paid.

[Rare Bird]

Drop Jerry him cos he'll do it all the time.

[Jonboy]

Some of my suppliers offer a discount for early payment say 5%, you need to lose this in the original price or quote, so you end up getting something back, it makes them feel good for getting a discount and you for getting a bit more either on the job or a bit of compensation for late payment.

It is very difficult to ruffle feathers chase money but I'm afraid some people take the piss and never pay on time, i always get my wife who runs the accounts to call them it saves me the stress and comes across better from a woman sometimes.

Always talk first and then start the letter writing i think ,don't bite the hand that feeds you.

[YNWaN]

Some companies offer a discount for prompt payment (or essentially a tariff for late payment).

(oops, that will teach me to read the thread - I see Jon has already made that point)

[The Grand Wazoo]

Jon's advice is good. Things are often so bad for a small business when they deal with a big one too - 30 days is nothing to them, some'll keep you hanging on for longer. But good payers can mean the difference between survival & disaster.

I often used to joke about a good friend who occasionally did some work for me, that one day he'd call me up & say, "Hi Chris, I'm just on my way back from the Post Office now. Have you got my invoice yet?"

[The Vinyl Adventure]

We give our customers "payment terms" like previously mentioned. For business customers it's a percentage added after 30 days. For non business it's the discount if paid within 30days ...

[Themis]

I guess payment delays is part of a normal business relationship. I almost never had a customer paying on time. ;)

[John]

My brother is self employed and has similar issues most of the time. He told me one story of him building an extension and the person was refusing to pay just because they thought they could get away with it so he said he would take back all his materials which would mean taking apart the work, the guy said he call the police so my brother pointed out to him he had not paid for the goods the goods where still his so he could phone the police if he wished, once he understood what was going to happen he got out a whole load of cash and paid my brother

[The Vinyl Adventure]

i havea customer trying to get his money back at the moment claiming my work isnt what he paid me for, despite the fact my web site states in plain english the service i offer and that he refused to meet me before the day to talk about what he wanted... he also acused me of putting my middle finger up at him when i handed the cd with the images on. he has threatend to take me to court to reclaim the £200 he paid me.
he told me all this on the phone so i have writen to him asking him to provide details of his complaint in writing... so far i have had no response
some customers are just out to get something for nothing

[Rare Bird]

You wont hear from him..I had a run thru on e-bay with a record deck i sold, the description was detailed to a 'T' packed to my usual high standard.i even mailed him to re itterate the description before i posted to avoid any combacks.He purched this deck on friday, i stated 3 working days dispatch time, as you know couriors are a no no weekend, the deck got to him tuesday morning. He was straight onto paypal & sent me nasty messages that i was breatching what i stated three days turnaround. I couldnt hammer into his head weekend days are not working days but o no this wasnt his intention, he wanted his money back or a court threat..Some people are Kuntz pure & simple.

[The Vinyl Adventure]

why would anyone go to court for a £200 .. i know thats what small claims court is for but photography subjective and what i did for him is exactly what i have done for 15 or more other customers who paid a lot more than he did and were very happy... i even have customers coming back to me next week to do thier mothers wedding ... so i cant be all bad ...
id love to show you the photos he is complaining about... he says they are blured... they are tack sharp where they are suposed to be but have out of focus flowers in the foreground that add to the compsition... its laughable really!
well it is now... when he first complained i was pretty upset about it, its hard to deal with someone telling you are shit at what you do ... but then a couple of days pass and you remember its not you its the idoit who wouldnt know a good photo if it slapped him round the face

[Marco]

I have a very simple solution in my business... After all other methods have failed, I visit people unexpectedly at their home of an evening who owe me money.

The surprise/embarrassment factor when you knock on the door usually does the trick, and I normally leave with the money I'm owed (or a substantial chunk of it) without having to resort to 'alternative methods of collection'..... ;)

Marco.

[The Vinyl Adventure]

i am slightly concerned my customer who wants his money back is going to do something similar.. he has come across as slightly unsavoury

[Marco]

Hamish, just tell him that your Bull Mastiff has a penchant for munching on human extremities! ;)

In all seriousness though, if you feel in any way threatened by this character, contact the police.

Marco.

[The Vinyl Adventure]

well its his move, il see what happens next

[Covenant]

I have a very simple solution in my business... After all other methods have failed, I visit people unexpectedly at their home of an evening who owe me money.

The surprise/embarrassment factor when you knock on the door usually does the trick, and I normally leave with the money I'm owed (or a substantial chunk of it) without having to resort to 'alternative methods of collection'..... ;)

Marco.

It sounds like your customers are mainly individuals rather than companies. Marching into a firm with fifty people sitting there is not going to achieve anything I would imagine.

[Marco]

Hi Jerry,

I rarely have payment problems with my corporate clients, as these are generally trusted companies I've built up a rapport with over many years. Fortunately I'm in a position now where I can pick and choose who I do business with on that level :)

However, with individuals it's rather different, so those responsible for delaying payment get a house call in the evening if they've made the mistake of pissing me about. Trust me, the surprise/embarrassment factor works - especially with their family present who often know nothing about the debt! ;)

Marco.

[Covenant]

I would like to be a fly on the wall when you do that Marco!

I dont have enough clients to be able to tell them to pop off and the one who is messing me around at the moment has given me the best fee earning work I have achieved.
I suppose I have just got to keep on pestering.

[Spectral Morn]

Offer a discount for prompt payment in 7 days (built into your figures)....then no discount for 30 days. After that the invoice should state that for late payment the invoiced amount will accrue 2% per week or part there of until settled.

Start off fair but firm, and don't accept BS excuses. Everything should be printed on your invoices and always confirmed with the customer/client before business is conducted, and a contract finalized.

However you must always do your best and do what you say you will, when and where.

Regards D S D L

[Jeremy Marchant]

... it really bugs me when people dont pay on time. ... Why should I have to listen to excuses about his business methods when my contract is with him?
...
How can you get through to them without loosing their custom?

As a business coach specialising in emotional intelligence (which includes relationships with people, such as clients) in the workplace, I could give you my professional opinion - gratis naturally. Just say if you would like it.

[Covenant]

As a business coach specialising in emotional intelligence (which includes relationships with people, such as clients) in the workplace, I could give you my professional opinion - gratis naturally. Just say if you would like it.

That would be appreciated Jeremy.

[twelvebears]

Drop Jerry him cos he'll do it all the time.

Is a 'Drop Jerry' some kind of wrestling move? :lolsign:

[Covenant]

Is a 'Drop Jerry' some kind of wrestling move? :lolsign:

:lol::lol::lol:

[Rare Bird]

I have a very simple solution in my business... After all other methods have failed, I visit people unexpectedly at their home of an evening who owe me money.

The surprise/embarrassment factor when you knock on the door usually does the trick, and I normally leave with the money I'm owed (or a substantial chunk of it) without having to resort to 'alternative methods of collection'..... ;)

Marco.

Which one then? ;)

http://i12.photobucket.com/albums/a222/LIVING-SIN/Krays.jpg

'I fink yew gort sommert er moin san'

[Macca]

Which one then? ;)

http://i12.photobucket.com/albums/a222/LIVING-SIN/Krays.jpg

'I fink yew gort sommert er moin san'

:lolsign:

I collect debts for a living - I don't look anything like Ronnie & Reggie though. Would help if I did...

[Haselsh1]

There's a guy here in Pickering who owns a local map making company and in 2006 asked me to do some photo's of his offices and staff for his own use. I shot the photographs but have never been paid for the work. He still owes me for them four years on. I sent him the usual written warning about infringement of copyright and the fact that it would go to court if he used the images but as far as I know, he has never used them.

[Jeremy Marchant]

That would be appreciated Jeremy.

There’s a lot of anger displayed on this thread and I thought I would address that first.

What always strikes me is that the (veiled) anger a service provider has because their client isn't paying (on time):
(a) has a bad effect on the service provider,
(b) has no constructive effect on the client,
and (c) - and this is the important bit - is almost certainly going to stop the only thing the service provider wants to have happen from actually happening – namely, the client pays the bill.

Hopefully, the truth of (a) is obvious: the bad effect is both on short term state of mind, happiness and the impact on colleagues and family, but also, if it becomes a pattern (and it will), on more serious mental health, cardiac and other problems.

(b): Actually some clients do do it just to wind up the other person, so by getting angry you're gratifying him. Hamish: I think your unsavoury client just wants a fight. He'd have a fight about the price of fish with his grocer if you hadn't provided an opportunity.

But the general reason why it has no constructive effect on the client is that, once the conversation becomes a fight, both parties will perpetuate that fight potentially indefinitely (see any number of examples in the world news).

(c): When a service provider works for a client, they have a relationship. And relationships have well defined stages through which they go (starting with the honeymoon stage). One of the stages is the fight stage. It actually happens in all relationships, business and otherwise, though in many business relationships it is so muted you hardly notice it.

Even big fights in business can be conducted via email in tones of sarcastically proper business speak – as with one of my clients who, in a long and verbose exchange of emails to his client who wasn’t paying, wrote in one ‘I attach another copy of your invoice for your convenience’. I asked my client for his evidence that his client had lost the invoice. Of course he had none. It came over to me, and must have come over to the client, as my client waving the invoice under his nose shouting ‘you still haven’t paid!’ It was just another jab, just another hit in the fight.

If you are stuck in the fight stage, it is very hard to get to the ‘paying the bill’ stage. (It’s not actually called that, but that is what it effectively is in these situations.) Paying the bill isn’t part of the fight, so it doesn’t happen in the fight. Of course you can get your money through sheer force, actual or implied, as some writers to this thread have observed – but it doesn’t do much for your relationship with that client and ultimately for your reputation or self-esteem.

So, as humanity has shown an infinite number of times over the millennia yet steadfastly refuses to learn, when someone wants to have a fight with you, don't fight back. One person by themselves cannot fight. As soon as you retaliate you are colluding in the fight and stopping the thing you want to have happen (that a calm and acceptable end to the situation is achieved) from happening.

If you're familiar with the Parent-Adult-Child model of transactional analysis, I am suggesting than an Adult-Adult dialogue is the most useful, rather than have both parties fighting over who can be the most righteous Parent. If you're not familiar, Games people play, by Eric Berne, is a good read.

As my client found, when he stopped fighting and wrote a very short, neutral email just correcting matters of fact, instead of getting back something that was as verbose as his emails had been – full of allegations about the quality of the work, probity of my client’s staff etc etc – all he got back was… a very short, neutral email. This required an even shorter reply and three days later the client paid in full.

---

Secondly, I pick up from the thread a certain amount of ‘being right’. That’s needing to be right, having an attachment to it. Maybe that’s inevitable in this sort of forum. I’m not suggesting that people say things which are wrong but, when it becomes an issue with someone that what they say must, by virtue of them saying it, be right and therefore anyone with a different view is necessarily wrong, then they have a problem. (Listen to any politician defending their position. Brown is just the most obvious example.)

Even if, as was the case with my client, everything they believe is right and the client is wrong, it is still a problem if the service provider has a need to be right.

Incidentally, I recognise this applies to me right now which is why I say on the first page of my website and before working with every new client: I don’t expect you to believe anything I say – but if you act as if it might be true, you may well find it helpful. So please consider that remark said here, too.

In other words, it’s about what is useful, helpful to believe. It’s also about what is useful, helpful for your business that you believe and do. Sometimes what is best for your business is something you don’t want to do. You have to be clear that, if you don’t do it, you are prejudicing the success of the business.

---

A few bits and pieces

Covenant: Do they eventually pay? If so, I can only suggest you adjust your expectations and cashflow to what is likely to happen and live with it. After all, money later is better than no money.

If they don't eventually pay, then sack them.

As a business coach working in the SME sector, I have my clients put me on a standing order which pays for the work delivered in a month by the end of the same month. Noone objects to this. (Mysteriously, I find this doesn’t work with the NHS, though they do pay within 30 days.)

Do your clients know that when you say "28 days" you mean it? Perhaps you could raise the subject with them before they come on as clients and let one or both of you decide it would better that they didn't become clients if this is going to become an issue.

Jonboy and others: Personally, I would never advise giving a discount for prompt payment. It just comes over as neediness, which is so unattractive. But that's another story.

[Covenant]

Thanks Jeremy.
If I have displayed anger its never been visible to the client. My anger centres on the excuse that they have't been paid; if everyone worked like that the country would grind to a halt.
28 days were the terms the client suggested! I am not in the position to be able to ditch them so just have to grin and bear it.

[Macca]

Good post by Jeremy - IME there is no point in ever taking business personally or geting involved in a slanging match - it is totally counter-productive and reduces the chances that you will get paid without sending a solicitor's letter which is going to cost you. Plus you lose any future business.

In my professional experience there are 3 types of customer:

1) they always pay within terms without needing to be asked.

2) They don't pay until you remind them to, but then they pay (known in the industry as a 'trigger customer' or 'trigger account'.

3) They have a deliberate policy of paying as late as possible in order to maximise cash flow (and because some of their suppliers are so badly organised they will never chase the payment and they get the work for free)

Almost all will be type 2 or 3. Government agencies often pay late but this is due to a more general slackness and 'manyana' attitude endemic in the public sector as a whole.

With deliberate late payers a policy of continued calling and maybe e-mailing, strictly non-confrontational of course - will eventually get your payment but you could be talking 90 days plus for a 30 day invoice. That's just how it goes.

The 'no-one has paid us yet so we can't pay you' excuse is one I hear occasionally. This is usually a big danger sign that they are in serious cash flow trouble; it is rarely a 'lie'. Much more common excuses are:

'The invoice has not been signed off yet'

'I can't issue a cheque today as there are no signatories in'

'There is a query with your invoice and I don't know what it is and the person who does is off sick/on maternity/on leave etc.

Personally I would not go into business unless I was confident I had enough working capital to accept that I may not get paid for up to six months on some invoices. Part of the solution, naturally, is to pay your suppliers as late as possible also - this may go against the grain if you are the 'I always pay my bills on time' type but it is a perfectly normal and commonplace business practice and nothing to be worried or ashamed about.

[Jeremy Marchant]

Thanks Jeremy.
If I have displayed anger its never been visible to the client. My anger centres on the excuse that they haven't been paid; if everyone worked like that the country would grind to a halt.
28 days were the terms the client suggested! I am not in the position to be able to ditch them so just have to grin and bear it.

Of course, I appreciate you maintain a professional manner with clients. I was highlighting some of the hidden dynamics. It's particularly important to realise that, as most communication is nonverbal, people can pick up your feelings about them however much they're contradicted by the content of what you say or write.

[Covenant]

I had a chat today with the guy who is blaming his client. It was very civilized and he copied me in on a 'chasing for payment' email. He says, in a week, if he has not been paid then he will 'sort something out'.
We shall see......

[Covenant]

Good news! He paid today. So simply waiting was the right thing to do. A friend who has a very successful business was urging me to send a solicitors letter. :)