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?
Nov 12 '05
28  2506 
Steve Jorgensen <no****@nospam. nospam> wrote in message news:<en******* *************** **********@4ax. com>... On Sat, 10 Jan 2004 21:04:32 GMT, dX********@bway .net.invalid (David W.
Fenton) wrote:
...One of the pieces of persuasion I use is this:
All my other clients pay me in good time. They pay me the same
hourly rate as you do. So, when one of those clients calls, and
you call, and both of you need something, whose work do you
think I'll turn my attention to first? Yes, the people who pay
on time. If you want that same kind of attention to your needs,
you need to pay on time, because right now, it costs me more to
take care of your needs than it does all my other clients.
Nice!
From the looks of the other posts looks like we all have something in
common. I had a very good customer that was super in the beginning but
over 5 years the amount of time between billing and payment began to
increase. I also had to call and or visit over and over again. Toward
the end of our relationship (we had actually been friends for over 15
years) he would promise to leave a check for me only after driving to
his business no one could ever find the checks and could not reach him
on the phone. After about $3000 later I called his office only to find
out the number has been disconnected. Since then, of course, I have
not heard a word. So much for friends and friendship. From now own is
50% down and the ramainder before I install it. I have also given the
thought to limiting the number of records that could be entered until
payment is received. This way the customer can check out the program
but still put limitations on how long they can use it before I remove
the "block".
Long in friends but short on money,
Chuck
DFS wrote: "Steve" <st***@nospam.c om> wrote in message
news:40******** *******@news.we stnet.com... On Fri, 9 Jan 2004 16:24:49 -0500, "DFS" <no****@nospam. com> wrote:
--Cut--
Have you ever not been paid? It appears that it just takes them long
to pay, but they do pay.
Yes, exactly. I've collected everything, but nearly all of was paid 4 to 10
weeks late.
4 to 10 weeks, .... I thought you were talking about something that was
important.
Your telephone company will allow you to go 8 weeks (2 months). Do work
for the government or a school. You could be looking at months. In one case
it was 8 months. I did one project for a state government that lasted for 3
years.
None of those invoices were ever paid under 2 months, most all were 3 going on 4
depending on when I mailed the invoice.
The idea of asking for something down and the balance upon completion is a good
idea. On projects that last a year or more I ask for something down and the
balance
divided by the number of months we agreed the project would take. When they ask
why, I tell them if they had one of their employees doing the project, wouldn't
they
be paid every week, or every two weeks, or once a month.
The problem is not your client. It's your stress dealing with "Am I going to
eat next week".
I'm not taking a shot at you because all of the consultants in this NewsGroup
deal with
the same problem of client payments. My point is, I'm not sure it is worth
losing a client over.
Maybe you should talk to them about how their long payment cycle (not slow
paying) is
causing a cash flow problem in your company. Whenever some one says slow
paying,
it implies a deadbeat or someone who doesn't want to pay and I not sure that's
the case here.
Ron--
Ronald W. Roberts
Roberts Communication rw************* ******@robcom.c om
To reply remove "_at_robcom_dot _com"
On Sun, 11 Jan 2004 17:43:11 -0500, "Ronald W. Roberts" <rw*@robcom.com >
wrote: DFS wrote:
"Steve" <st***@nospam.c om> wrote in message
news:40******** *******@news.we stnet.com... > On Fri, 9 Jan 2004 16:24:49 -0500, "DFS" <no****@nospam. com> wrote:
>
--Cut--
> Have you ever not been paid? It appears that it just takes them long
> to pay, but they do pay.
Yes, exactly. I've collected everything, but nearly all of was paid 4 to 10
weeks late.
4 to 10 weeks, .... I thought you were talking about something that was
important.
I guess that's a matter of perspective. I bill semi-monthly, and my contracts
are mostly written for NET 10. I have one at NET 15 because they told me
their paperwork can't get processed any faster than that. If I'm working well
into the next 1/2 month term without payment for the previous term, I'm taking
a risk that I might not get paid for my work, plus my budget is based on
receiving my payments no more than 2 weeks past due. I simply won't work with
that - I may have to scramble to find other clients, but it's doable. rw*@robcom.com (Ronald W. Roberts) wrote in
<40************ ***@robcom.com> : DFS wrote:
"Steve" <st***@nospam.c om> wrote in message
news:40******** *******@news.we stnet.com... > On Fri, 9 Jan 2004 16:24:49 -0500, "DFS" <no****@nospam. com>
> wrote:
> --Cut--
> Have you ever not been paid? It appears that it just takes
> them long to pay, but they do pay.
Yes, exactly. I've collected everything, but nearly all of was
paid 4 to 10 weeks late.
4 to 10 weeks, ....
Not 4-10 weeks from the invoice date, but 4-10 weeks LATE.
. .. I thought you were talking about something
that was important.
With Net 30 terms, 4 to 10 weeks late means 8-14 weeks after the
invoice, more or less.
Your telephone company will allow you to go 8 weeks (2 months).
You pay for your telephone service up front.
In the current circumstances, we are talking about bills generated
for work already completed. So, add another four weeks, to get
12-16 weeks, and we now have a point of comparison to a telephone
bill.
Do work for the government or a school. You could be looking at
months. In one case it was 8 months. I did one project for a
state government that lasted for 3 years.
None of those invoices were ever paid under 2 months, most all
were 3 going on 4 depending on when I mailed the invoice.
Well, it all depends on your terms in your original agreement. The
fact that such organizations tend to be heavily beaurocratic and
take a long time to process invoices is something you should
account for in writing your original agreement. Indeed, for any
organization that starts out with a built-in 2 month payment time,
I would simply not commence any work until I had been pre-paid for
some portion of it.
And the larger the contract, the more this would be the case. If
you're working a big contract where you're putting in half your
billable time on it, then you really ought to be paid sooner,
rather than later, or you won't be able to pay your own bills.
The idea of asking for something down and the balance upon
completion is a good idea. On projects that last a year or more I
ask for something down and the balance
divided by the number of months we agreed the project would take.
When they ask why, I tell them if they had one of their employees
doing the project, wouldn't they
be paid every week, or every two weeks, or once a month.
That's a good analogy.
The problem is not your client. It's your stress dealing with "Am
I going to eat next week".
I'm not taking a shot at you because all of the consultants in
this NewsGroup deal with
the same problem of client payments. My point is, I'm not sure it
is worth losing a client over.
I would say that it *is* worth losing the client over, because the
time you spend servicing a client who does a poor job of paying you
what is due you is time you could be serving a client who *does*
pay on time.
Maybe you should talk to them about how their long payment cycle
(not slow paying) is
causing a cash flow problem in your company. Whenever some one
says slow paying,
it implies a deadbeat or someone who doesn't want to pay and I not
sure that's the case here.
I'd simply cut them off on any further work once they have invoices
outstanding past a certain period. That runs a risk, but in my
experience, it's been worth it. The only time I've ever lost was a
client I hated working for in the first place, because the
organization was completely disfunctional. In that case, the client
refused to pay for work that I'd completed, even though an
underling had authorized the work, on the understanding that it
would be billed outside the existing project. I was relieved to be
out from under it.
--
David W. Fenton http://www.bway.net/~dfenton
dfenton at bway dot net http://www.bway.net/~dfassoc
On Fri, 9 Jan 2004 16:24:49 -0500, "DFS" <no****@nospam. com> wrote:
To additional suggestions:
* Assess financing charges, and insist they get paid up before other
work commences.
* Some clients are just so bad they can better be serviced by your
competition.
-Tom. 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?
For those of you who have severed relations with your clients because
they have failed to meet their payment obligations I would suggest
taking them to court. You'd be surprised at how quickly they will
contact you to make payment arrangements once they've received notice
from the court.
Of course, make sure they are still in business when you file your
paperwork. In most cases you won't need a lawyer (unless you're a
corporation) and as long as you can prove that the work was done and
that an agreement exists and show a payment history you shouldn't have
a problem.
I've done this on many occasions (not with Access clients) and have
always prevailed. Once you've received the judgment in your favor you
can contact a marshall who can force them to pay. The marshall's fee
and 10% interest are added to the judgement and are not charged to you
either.
My 2 cents! dX********@bway .net.invalid (David W. Fenton) wrote in message news:<94******* *************** *****@24.168.12 8.86>... st***@nospam.co m (Steve) wrote in
<40************ ***@news.westne t.com>:
In this interest rate environment, your financing costs are
minimal. So, reallistically, they delay is not costing you.
That is not true at all.
If you have other clients who pay on time, it costs you much more
to service the slow-paying client than the ones who pay on time.
It's also a psychological disincentive that will make you
unenthusiastic about working for the slow-paying client, because it
means you are slowing down cash flow.
You have a finite number of hours in the week, and you must use
them efficiently. It is illogical to then give the same priority to
the work for a client who doesn't pay on time as you give to a
client who pays within terms. It is also bad business.
Geez - anybody ever heard of Dun and Bradstreet? http://www.dnb.com
If the most reputable report in the industry for only $5 shows they don't
pay their bills, haven't been in business long, or have too many employees
based on their annual earnings and means -- THEN LET YOUR COMPETITORS HAVE
THEM.
There are risks (like having your point man with the momentum die of illness
half way through the project), even with a great looking report - but odds
are incredibly more slim that you will have horror stories to post here.
--
Jerry Boone
Analytical Technologies, Inc. http://www.antech.biz
Secure Hosting and Development Solutions for ASP, ASP.NET, SQL Server, and
Access
"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
I have much the same problem with some of my clients (although I work
for a large consulting company, so I have alot of "help" in dealing
with it). One solution I have found effective is to get the person
who has authorized the work to pay the bills by corporate issued
credit card. I'm finding more and more companies issue credit cards
to select employees for purchasing goods and services. The advantage
is that you bypass the whole AR department. Of course you need to be
set up to accept credit cards and take whatever financial hit they
impose, but you get paid...
Tom
Tom van Stiphout <to*****@no.spa m.cox.net> wrote in message news:<rg******* *************** **********@4ax. com>... On Fri, 9 Jan 2004 16:24:49 -0500, "DFS" <no****@nospam. com> wrote:
To additional suggestions:
* Assess financing charges, and insist they get paid up before other
work commences.
* Some clients are just so bad they can better be serviced by your
competition.
-Tom.
"DFS" wrote I'm unfortunately about to change,
or sever, a two-year relationship
with a very slow-paying client.
In one case, I had a client with a history of slow payment who wanted me to
do some additional work. I discussed the matter with him and we came to an
agreement that I charged a higher-than-usual rate, but gave a 10% discount
for payment in 15 days, a 5% discount for payment in 30 days, and after 60
days, late-payment penalties began to accumulate. Only once or twice in
something over two years did he actually pay the full rate, and never
accumulated any late-payment penalties.
But it grated on his nerves that "he was having to pay me $XX" and would
mention it from time to time, and I'd have to remind him that now that his
payments were timely, he was actually paying me $XX - 10% most of the time
(which was not that much more than I'd been getting in the past "when we had
payment problems") and that several times, I'd waived the extra when I knew
of particular problems he faced.
The business arrangement finally terminated, but it was because the
application we were creating/enhancing was completed, not because of our
monetary arrangments. After all, at my suggestion, he was marking up even
the highest rate to a much more profitable fee than he had done before, and
his customer was paying that without protest.
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