Clients who don't pay

[DFS]

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?

[David W. Fenton]

no****@nospam.com (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]

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********@bway.net.invalid> wrote in message
news:94***************************@24.168.128.86.. .

no****@nospam.com (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

[Tall Paul]

"Larry Linson" <bo*****@localhost.not> wrote in message
news:jV***************@nwrddc01.gnilink.net...

I did some work for a contractor

[exaggerations, lies, and other misrepresentations 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.

[David W. Fenton]

bo*****@localhost.not (Larry Linson) wrote in
<jV***************@nwrddc01.gnilink.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

[Larry Linson]

"Tall Paul" <NO****@NOSPAM.com> wrote in message
news:40******************************@news.teranew s.com...

"Larry Linson" <bo*****@localhost.not> wrote in message
news:jV***************@nwrddc01.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.

[TC]

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.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?

[DFS]

"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.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?

[Steve Jorgensen]

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

[Steve]

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.

Steven

[DFS]

"Steve" <st***@nospam.com> wrote in message
news:40***************@news.westnet.com...

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 avery slow-paying client.

Most of the 15 invoices I've sent them arrive 6 to 8 weeks late, and usuallyonly after repeated calls to the requesting client department, AP and
finally Legal. I really think they would never pay some of these invoicesif I didn't hound them. I don't have the time or energy or stress-handlingto 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 requirepayment of 100% of the development estimate before I start work, or 2) cutthem off entirely. I don't want to do either, but I'm really sick of havingto 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.

Yes, exactly. I've collected everything, but nearly all of was paid 4 to 10
weeks late.

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.
It's not the time - it's the stress of collecting my money, for work they
ask me to do.

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?
That's another conundrum. They haven't provided consistent work, but when
they call me it's usually sizeable amounts - several weeks to several
months.

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.
The issue is this: it's disrespectful and unprofessional for them to delay
paying me for work they ask me to do. And I worry if I'll ever collect, and
what my options will then be. If I have to pay a collection agency or
attorney 25% on a $10K invoice, it's a big problem.
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,
I've been thinking maybe I should be more patient. But I've also found that
the more patient I am, the later the payment becomes.

and I would not make such a statement unless I
was really willing to walk away.

I'm definitely willing to walk away, but here's my ace card - they almost
certainly won't let me walk away. They'll probably grumble, but they have
too much invested in my systems and my knowledge. I have a strong feeling
they'll agree to upfront payment.

Regardless, they don't send much work my way (maybe 400 billable hours in
the last year and a half), and I have another consistent client - but just
one more - that pays on time.

[David W. Fenton]

no****@nospam.com (DFS) wrote in
<10*************@corp.supernews.com>:

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.

I have always gotten results with late payers who need my services
on an ongoing basis. I simply say:

No pay, no work.

That is, until you pay the outstanding bills, I'll do no further
work for you.

Only once has this not worked. In that instance, the client walked
away from the project and I lost over $5K (almost half of which I'd
already paid to a subcontractor). But in every other case, I have
gotten paid *really fast*. In the case where I lost the money
though, it was a case where the manager of the project had changed,
and it wasn't her project and she didn't like me at all (the
feeling was mutual), so I wasn't surprised that thinks tanked. I
wasn't all the upset about it in the long run. Yes, I would have
liked to have made the money, and I also felt bad about leaving the
other people I'd worked with in the lurch, but it wasn't my fault.

If you have an ongoing relationship with these folks and a good
one, cutting them off will work.

Then, after they pay the bill, tell them they now have to keep a
$1K deposit on hand until they've maintained 45 day payment average
for a year. Or something like that. I've never actually needed to
do that, but I have contemplated it.

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.

I've used this one and it works *really well*.

The only leverage you have is withholding your services. You can
threaten it, but you have to be willing to follow through if you
make the threat.

And you have to be willing to give up what's owed and what could be
earned in the future.

--
David W. Fenton http://www.bway.net/~dfenton
dfenton at bway dot net http://www.bway.net/~dfassoc

[David W. Fenton]

st***@nospam.com (Steve) wrote in
<40***************@news.westnet.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.

--
David W. Fenton http://www.bway.net/~dfenton
dfenton at bway dot net http://www.bway.net/~dfassoc

[Steve Jorgensen]

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!

[David W. Fenton]

no****@nospam.com (DFS) wrote in
<10*************@corp.supernews.com>:

It's not the time - it's the stress of collecting my money, for
work they ask me to do.

The workman is worth his hire.

Cut them off from any additional work any time they have invoices
over 60 days. They will pay.

--
David W. Fenton http://www.bway.net/~dfenton
dfenton at bway dot net http://www.bway.net/~dfassoc

[David W. Fenton]

no****@nospam.com (DFS) wrote in
<10*************@corp.supernews.com>:

If I have to pay a collection agency or
attorney 25% on a $10K invoice, it's a big problem.

I would never do a project that large on any basis but with a
deposit and payments throughout the project. There's too much
danger of the client abandoning it before it's complete, as well as
too much risk of them holding up the final payment for nit-picky
approval.

--
David W. Fenton http://www.bway.net/~dfenton
dfenton at bway dot net http://www.bway.net/~dfassoc

[David W. Fenton]

no****@nospam.com (DFS) wrote in
<10*************@corp.supernews.com>:

Regardless, they don't send much work my way (maybe 400 billable
hours in the last year and a half), and I have another consistent
client - but just one more - that pays on time.

I consider 400 billable hours very significant.

If they need you that much, then you have pretty good leverage.

--
David W. Fenton http://www.bway.net/~dfenton
dfenton at bway dot net http://www.bway.net/~dfassoc

[DFS]

"Steve Jorgensen" <no****@nospam.nospam> wrote in message
news:qj********************************@4ax.com...

What I think you need to do is tell the client ASAP, in a calm, professional way,
I agree, but it's getting harder and harder to be calm because the delays
have been happening for a while now.

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?"
I've written several draft emails, unsent, then looked at them a few days
later and softened them a bit, because I sounded very mad and harsh. But
I'm going to make sure my displeasure is evident.
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

I'll look it up. Thanks.

[David W. Fenton]

no****@nospam.com (DFS) wrote in
<10*************@corp.supernews.com>:

"Steve Jorgensen" <no****@nospam.nospam> wrote in message
news:qj********************************@4ax.com.. .

What I think you need to do is tell the client ASAP, in a calm,
professional way,

I agree, but it's getting harder and harder to be calm because the
delays have been happening for a while now.

Take ego and emotion out of it. It is a business issue. Treat it
objectively, however hard that may be. The client won't respond
better if you're angry. Firm, yes, but anger or self-righteousness
won't get you anywhere.

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?"

I've written several draft emails, unsent, then looked at them a
few days later and softened them a bit, because I sounded very mad
and harsh. But I'm going to make sure my displeasure is evident.

That's a good way to do it -- the main thing is to not be mad when
you communicate with them. My experience has been that anger never
helps at all.

I have had nothing but grief with problem clients whenever I late
ego and emotion get involved. When I've approached as though I was
able to consider it purely as a business issue, things have gone
better. You need to present them with real business reasons for why
they should be paying you on time, and why it is hurting them as
much as it's hurting youm and that it will hurt them more soon in
the form of the withholding of your services.

--
David W. Fenton http://www.bway.net/~dfenton
dfenton at bway dot net http://www.bway.net/~dfassoc

[Steve Jorgensen]

On Sun, 11 Jan 2004 02:06:18 GMT, dX********@bway.net.invalid (David W.
Fenton) wrote:

no****@nospam.com (DFS) wrote in
<10*************@corp.supernews.com>:

"Steve Jorgensen" <no****@nospam.nospam> wrote in message
news:qj********************************@4ax.com. ..

What I think you need to do is tell the client ASAP, in a calm,
professional way,

I agree, but it's getting harder and harder to be calm because the
delays have been happening for a while now.

Take ego and emotion out of it. It is a business issue. Treat it
objectively, however hard that may be. The client won't respond
better if you're angry. Firm, yes, but anger or self-righteousness
won't get you anywhere.

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?"

I've written several draft emails, unsent, then looked at them a
few days later and softened them a bit, because I sounded very mad
and harsh. But I'm going to make sure my displeasure is evident.

That's a good way to do it -- the main thing is to not be mad when
you communicate with them. My experience has been that anger never
helps at all.

I was going to give a similar response here. Your displeasure it less than
irrelevant and will not get you what you want or help your business
relationship. You are simply telling them what you (or better yet, your
business) expects in order to continue the work.

[Chuck]

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

[Ronald W. Roberts]

DFS wrote:

"Steve" <st***@nospam.com> wrote in message
news:40***************@news.westnet.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.com
To reply remove "_at_robcom_dot_com"

[Steve Jorgensen]

On Sun, 11 Jan 2004 17:43:11 -0500, "Ronald W. Roberts" <rw*@robcom.com>
wrote:

DFS wrote:

"Steve" <st***@nospam.com> wrote in message
news:40***************@news.westnet.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.

[David W. Fenton]

rw*@robcom.com (Ronald W. Roberts) wrote in
<40***************@robcom.com>:

DFS wrote:

"Steve" <st***@nospam.com> wrote in message
news:40***************@news.westnet.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

[Tom van Stiphout]

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?

[Ed Marzan]

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***************************@24.168.128.86> ...

st***@nospam.com (Steve) wrote in
<40***************@news.westnet.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.

[Jerry Boone]

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********@bway.net.invalid> wrote in message
news:94***************************@24.168.128.86.. .

no****@nospam.com (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

[Tom Mitchell]

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.spam.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.

[Larry Linson]

"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.

Larry Linson