I'm unfortunately about to change, or sever, a two-year relationship with a
very slow-paying client.
Most of the 15 invoices I've sent them arrive 6 to 8 weeks late, and usually
only after repeated calls to the requesting client department, AP and
finally Legal. I really think they would never pay some of these invoices
if I didn't hound them. I don't have the time or energy or stress-handling
to make repeated collection calls and emails for work they ask me to do.
It's gotten so bad that I'm about to 1) change my contract terms to require
payment of 100% of the development estimate before I start work, or 2) cut
them off entirely. I don't want to do either, but I'm really sick of having
to ask "Where's my money?" over and over again.
Thoughts? Similar experiences?
28  2505  no****@nospam.c om (DFS) wrote in
<vv************ @corp.supernews .com>: I'm unfortunately about to change, or sever, a two-year
relationship with a very slow-paying client.
Most of the 15 invoices I've sent them arrive 6 to 8 weeks late,
and usually only after repeated calls to the requesting client
department, AP and finally Legal. I really think they would never
pay some of these invoices if I didn't hound them. I don't have
the time or energy or stress-handling to make repeated collection
calls and emails for work they ask me to do.
It's gotten so bad that I'm about to 1) change my contract terms
to require payment of 100% of the development estimate before I
start work, or 2) cut them off entirely. I don't want to do
either, but I'm really sick of having to ask "Where's my money?"
over and over again.
Thoughts? Similar experiences?
I've had a huge increase in exactly this kind of situation in the
last year. It's driving me out of business as a self-employed
consultant, and into searching for a full-time job.
The client who has been the worst offender recently has been told
this:
Any future job estimated at over 14 hours will require these
payment terms:
1. 1/3 of the estimate deposit before any work will be commenced.
2. payment 1/3 of work done so far due upon delivery. Payment must
be received and cleared before any further work other than bug
fixes will be addressed.
3. 1/3 upon approval, or within N weeks from delivery, where N is
determined by agreement between the parties on a case-by-case
basis.
I have used that approach an all my projects with new clients. This
client had an ongoing relationship with me that started out as
small bits of work paid in about 45 days (since it was a government
organization, I didn't consider that too bad). But both large
projects from last year were very late in payment, and that's why I
informed them of the change of terms.
I have found that small businesses and individuals are much better
clients in terms of paying, as they have no bureaucracy to delay
things, and being small businesses (like you and me) understand
that you need that money quickly. I much prefer working for the
small fry because of that.
--
David W. Fenton http://www.bway.net/~dfenton
dfenton at bway dot net http://www.bway.net/~dfassoc
I did some work for a contractor to a very large corporation, and because he
and the (user department) contract administrator weren't "pushy", it would
sometimes be three months or more, in the worst case of which I was aware,
six. Another subcontractor pointed out that he had once managed an Accounts
Payable department for a company and they felt honor-bound to delay payment
as much as legally possible. For example, if a user department submitted an
approved invoice, his AP department was obligated to respond within 30
days -- but if they found an omission or error, they would put it aside and
then send it back to the submitting user department on the 29th day. He
suspected that the same was true in the prime contractor's client company.
Then he found out from the contractor that sometimes the contract admin
would hold the invoice for 30 - 45 days until he could submit it to his
manager with an activity report showing some milestone had been met.
Not too much later, when the manager of the user department and the contract
admin were both promoted with a transfer, the new manager and new contract
admin wouldn't put up with that kind of foolishness and his pay was much
more prompt. So this may partially be due to the particular people involved,
not just the corporate culture.
It may not work for your clients, but some of my acquaintances sell blocks
of time... pay up front for "x" hours, they work those hours off, then you
pay for another block before they do any more work. But, the cases I know
where they are doing so do not involve weeks or months of work -- relatively
few hours at a time.
Larry
"David W. Fenton" <dX********@bwa y.net.invalid> wrote in message
news:94******** *************** ****@24.168.128 .86... no****@nospam.c om (DFS) wrote in
<vv************ @corp.supernews .com>:
I'm unfortunately about to change, or sever, a two-year
relationship with a very slow-paying client.
Most of the 15 invoices I've sent them arrive 6 to 8 weeks late,
and usually only after repeated calls to the requesting client
department, AP and finally Legal. I really think they would never
pay some of these invoices if I didn't hound them. I don't have
the time or energy or stress-handling to make repeated collection
calls and emails for work they ask me to do.
It's gotten so bad that I'm about to 1) change my contract terms
to require payment of 100% of the development estimate before I
start work, or 2) cut them off entirely. I don't want to do
either, but I'm really sick of having to ask "Where's my money?"
over and over again.
Thoughts? Similar experiences?
I've had a huge increase in exactly this kind of situation in the
last year. It's driving me out of business as a self-employed
consultant, and into searching for a full-time job.
The client who has been the worst offender recently has been told
this:
Any future job estimated at over 14 hours will require these
payment terms:
1. 1/3 of the estimate deposit before any work will be commenced.
2. payment 1/3 of work done so far due upon delivery. Payment must
be received and cleared before any further work other than bug
fixes will be addressed.
3. 1/3 upon approval, or within N weeks from delivery, where N is
determined by agreement between the parties on a case-by-case
basis.
I have used that approach an all my projects with new clients. This
client had an ongoing relationship with me that started out as
small bits of work paid in about 45 days (since it was a government
organization, I didn't consider that too bad). But both large
projects from last year were very late in payment, and that's why I
informed them of the change of terms.
I have found that small businesses and individuals are much better
clients in terms of paying, as they have no bureaucracy to delay
things, and being small businesses (like you and me) understand
that you need that money quickly. I much prefer working for the
small fry because of that.
--
David W. Fenton http://www.bway.net/~dfenton
dfenton at bway dot net http://www.bway.net/~dfassoc
"Larry Linson" <bo*****@localh ost.not> wrote in message
news:jV******** *******@nwrddc0 1.gnilink.net.. . I did some work for a contractor
[exaggerations, lies, and other misrepresentati ons removed]
Newbies Take Note: "David W. Fenton," "Larry Linson," and "Tony Toews" are
all the same person posting from different news servers and using bogus
addresses. Whoever this person is, he/she has been posting messages that
are deliberately misleading readers in an attempt to discredit CDMA. bo*****@localho st.not (Larry Linson) wrote in
<jV************ ***@nwrddc01.gn ilink.net>: I did some work for a contractor to a very large corporation, and
because he and the (user department) contract administrator
weren't "pushy", it would sometimes be three months or more, in
the worst case of which I was aware, six. Another subcontractor
pointed out that he had once managed an Accounts Payable
department for a company and they felt honor-bound to delay
payment as much as legally possible. For example, if a user
department submitted an approved invoice, his AP department was
obligated to respond within 30 days -- but if they found an
omission or error, they would put it aside and then send it back
to the submitting user department on the 29th day. He suspected
that the same was true in the prime contractor's client company.
Then he found out from the contractor that sometimes the contract
admin would hold the invoice for 30 - 45 days until he could
submit it to his manager with an activity report showing some
milestone had been met.
My first job out of college was in an A/P department. These were
big bills, for the most part. The account I paid bills for (it was
only one) sent a single monthly billing and I entered one invoice
for each branch of the company I worked for (around 250), for a
total each month in the neighborhood of $1.5-3 million. Of course,
processing the monthly billing for payment took maybe 2 days a
month. The rest of my time was spent auditing those invoices
(matching them against purchase orders and packing slips to detect
overcharges).
These large vendors offered 1.5% discounts if paid within certain
terms. We made sure we paid those invoices on time, because it was
definitely worth it to make those terms in order to save $15-30K.
Not too much later, when the manager of the user department and
the contract admin were both promoted with a transfer, the new
manager and new contract admin wouldn't put up with that kind of
foolishness and his pay was much more prompt. So this may
partially be due to the particular people involved, not just the
corporate culture.
I basically come to an understanding with my clients. My terms are
"due upon receipt," which I explain to them means "pay it in your
next check run." If the client pays bills twice a month, I expect
to average 15 days for payments.
For large, bureaucratic organizations, I never expect less than
30-45 days.
Unfortunately, much of my business lately has been subcontracting
work, and the people I work for often end up not processing
invoices when I send them. I have to stay on top of them to make
sure they received and billed the invoices.
It may not work for your clients, but some of my acquaintances
sell blocks of time... pay up front for "x" hours, they work those
hours off, then you pay for another block before they do any more
work. But, the cases I know where they are doing so do not involve
weeks or months of work -- relatively few hours at a time.
I've got a couple of clients that I give a discount to for hours
paid up front, in blocks of 5 or 10 hours (depends on the client).
This works pretty well, because you can manageably estimate pretty
accurately how many hours they are likely to need.
--
David W. Fenton http://www.bway.net/~dfenton
dfenton at bway dot net http://www.bway.net/~dfassoc
"Tall Paul" <NO****@NOSPAM. com> wrote in message
news:40******** *************** *******@news.te ranews.com...
"Larry Linson" <bo*****@localh ost.not> wrote in message
news:jV******** *******@nwrddc0 1.gnilink.net.. . I did some work for a contractor
[exaggerations, lies,
The poster of the erroneous and misleading claim "Tall Paul" hides behind
the semi-anonymous news server "teranews" which, in the past, has been used
by Don P Mellon.
I don't work in an environment where this is can be a problem for me. So
this is just a 2c opinion:
Have a quiet word to the key person who you do the work for. That person is
probably not the accounts manager. But he/she may have a good relationship
with the accounts manager, and/or, know someone who can give that manager
directions.
"Fred, I really like doing business with your organization, but my
accountant has told me that these late invoice payments, are becoming a real
problem for us. It's having a serious impact on my business'es cashflow. I
really need to keep my accountant happy! Can you see anything we can do to
improve this?"
No need to tell him that you're ready to give up on them. He'll get the
point immediately, as son as you raise the issue in those terms.
HTH,
TC
"DFS" <no****@nospam. com> wrote in message
news:vv******** ****@corp.super news.com... I'm unfortunately about to change, or sever, a two-year relationship with
a very slow-paying client.
Most of the 15 invoices I've sent them arrive 6 to 8 weeks late, and
usually only after repeated calls to the requesting client department, AP and
finally Legal. I really think they would never pay some of these invoices
if I didn't hound them. I don't have the time or energy or
stress-handling to make repeated collection calls and emails for work they ask me to do.
It's gotten so bad that I'm about to 1) change my contract terms to
require payment of 100% of the development estimate before I start work, or 2) cut
them off entirely. I don't want to do either, but I'm really sick of
having to ask "Where's my money?" over and over again.
Thoughts? Similar experiences?
"TC" <a@b.c.d> wrote in message news:1073714065 .787234@teuthos ... I don't work in an environment where this is can be a problem for me. So
this is just a 2c opinion:
Have a quiet word to the key person who you do the work for. That person
is probably not the accounts manager. But he/she may have a good relationship
with the accounts manager, and/or, know someone who can give that manager
directions.
It's not really the "fault" of the guy who asks me to do the work as much as
the myriad other people and departments that are involved. It's a big
company, and depending on the invoice amounts they classify the expense as
operating or capital, so the invoice might go to other departments for
coding, etc.
Someone somewhere is losing (accidentally) or delaying (purposely) the
invoice.
"Fred, I really like doing business with your organization, but my
accountant has told me that these late invoice payments, are becoming a
real problem for us. It's having a serious impact on my business'es cashflow. I
really need to keep my accountant happy! Can you see anything we can do to
improve this?"
No need to tell him that you're ready to give up on them. He'll get the
point immediately, as son as you raise the issue in those terms.
Unfortunately, it's definitely gotten to that point. Asking nicely hasn't
done anything. Nor has contacting Legal. They make one call and never
follow up again.
I'll get the same answer for 4 weeks straight: "I'll talk to "Julie"
tomorrow. She works with "Dave" who handles capital expenditures. Will let
you know tomorrow."
Then 8 or 10 weeks go by and nothing. I tell you what: none of them would
work for a company that delayed their paychecks for 8 weeks, that's for
sure.
Or they'll blame it on the guy on the job before them: "John" didn't put a
system in place for getting you paid." One of the guys (the Senior VP who
approved the expenditure) lied to me several times: "I sent the invoices
yesterday." "I'm walking them to AP personally."
It's ridiculous, though I must admit I may need to be more patient. The
work is interesting, high visibility, very important to the department and
company, and fairly lucrative.
Thanks
HTH,
TC
"DFS" <no****@nospam. com> wrote in message
news:vv******** ****@corp.super news.com... I'm unfortunately about to change, or sever, a two-year relationship
with a very slow-paying client.
Most of the 15 invoices I've sent them arrive 6 to 8 weeks late, and
usually only after repeated calls to the requesting client department, AP and
finally Legal. I really think they would never pay some of these
invoices if I didn't hound them. I don't have the time or energy or
stress-handling to make repeated collection calls and emails for work they ask me to do.
It's gotten so bad that I'm about to 1) change my contract terms to
require payment of 100% of the development estimate before I start work, or 2)
cut them off entirely. I don't want to do either, but I'm really sick of
having to ask "Where's my money?" over and over again.
Thoughts? Similar experiences?
On Fri, 9 Jan 2004 16:24:49 -0500, "DFS" <no****@nospam. com> wrote: I'm unfortunately about to change, or sever, a two-year relationship with a
very slow-paying client.
Most of the 15 invoices I've sent them arrive 6 to 8 weeks late, and usually
only after repeated calls to the requesting client department, AP and
finally Legal. I really think they would never pay some of these invoices
if I didn't hound them. I don't have the time or energy or stress-handling
to make repeated collection calls and emails for work they ask me to do.
It's gotten so bad that I'm about to 1) change my contract terms to require
payment of 100% of the development estimate before I start work, or 2) cut
them off entirely. I don't want to do either, but I'm really sick of having
to ask "Where's my money?" over and over again.
Thoughts? Similar experiences?
Fortunately, I don't have this problem with my clients just now, but it seems
clear to me that, if you do, you pretty much have to draw some boundaries
right now, and don't feel bad about doing it. A client that can't pay
according to contract can hardly cry foul when you start demanding payment
up-front. A common way to handle this is with retainers of say, 15 days.
Over the last 2 years in business, I've found that, not demanding that clients
meet their obligations to you has some serious negative consequences. The
worst consequence it that it actually ends up making -you- look
unprofessional, and the client will then start to devalue you and your work.
You're feeling like you want to be nice to this client because you like them,
and because you don't want to make waves with one of your prime sources of
income, but this same client who's not paying you on time may well end up
dropping you because they don't value you or see you as professional.
What I think you need to do is tell the client ASAP, in a calm, professional
way, that because it has cost you so much of your time dealing with their
payment delinquencies, henceforth, all payments will have to be made up front
in the form of retainers. Then say something like, "doesn't that sound
reasonable to you?" You could make the offer something like what David
suggested, but some clients may actually prefer the simplicity of just paying
up front, and keeping it to 15-day retainers limits their risk in doing it
that way. Your paperwork will also be easier that way.
You could also offer a plan like David's as a compromise if they seem to be
balking at the full up front payment, but make sure, before you compromise at
all, that the client sees that you are willing to drop them if some
accommodation cannot be reached, even though that may be scary for you to do.
Book recommendation:
"Start With No" by Jim Camp
On Fri, 9 Jan 2004 16:24:49 -0500, "DFS" <no****@nospam. com> wrote: I'm unfortunately about to change, or sever, a two-year relationship with a
very slow-paying client.
Most of the 15 invoices I've sent them arrive 6 to 8 weeks late, and usually
only after repeated calls to the requesting client department, AP and
finally Legal. I really think they would never pay some of these invoices
if I didn't hound them. I don't have the time or energy or stress-handling
to make repeated collection calls and emails for work they ask me to do.
It's gotten so bad that I'm about to 1) change my contract terms to require
payment of 100% of the development estimate before I start work, or 2) cut
them off entirely. I don't want to do either, but I'm really sick of having
to ask "Where's my money?" over and over again.
Thoughts? Similar experiences?
Have you ever not been paid? It appears that it just takes them long
to pay, but they do pay.
How much of your time does it really take for collection? I know it
is aggrevation - but these calls are really not time consuming. If
they are, build the additional time into your pricing.
Do you have better clients to replace them with? They seem to provide
you with consistent, good quality work. Do you have any better
offers?
In this interest rate environment, your financing costs are minimal.
So, reallistically, they delay is not costing you. If you have cash
flow issues, you may want a retainer up front, which is a good policy
regardless. But asking a current client for a retainer now may be
difficult, since they have demonstrated constant payment.
You can put pressure on them, and bring up the fact that you may not
be able to provide them future services and support. But, 2 months
late is not that bad, and I would not make such a statement unless I
was really willing to walk away.
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