Slow paying client

[paulears]

A client I do occasional work for - usually emergency "help, we have a show in X hours and something is wrong" is a very slow player - he ignores my 30 day terms and it's usually 50+. Each time I vow not to do it again, and last time I felt sorry for the manager who say he realised I was being paid slowly, and he vowed to sort to out of I could fix the next problem. Guess what they didn't pay again, so I sent in the last pay up please statement with the intention of dumping them. They responded saying it was my fault because I didn't tell them I wanted paying immediately - had they known, they would have.

 

Amazing!

[GaryNattrass]

Ha ha tell them to try that gem the next time they try to buy anything.

 

WHAT you want me to pay you now for my petrol etc ?????

[chris4monitors]

You should start doing discounted rates on invoices ie. if the job is worth £300 invoice for £400 with a 25% discount for 14 day settlement this way if its late they pay you the extra 25%. I have had some success don this in the past with new or unreliable payers.

[Hugh]

Some people seem to play a game of running up bills with people, and not paying, they then move on to another supplier run up a large bill with them until they won't supply any more and so on. The only way to deal with this behavior is for everyone to set realistic credit limits for people, particularly sole traders, and to withdraw all credit if terms are not met. These people tend to get in an "emergency" because someone won't supply something beaucas they have not been paid. These are also the kind of people that undercut everyone to get a job then piece it together from sub hired kit, pushing for heavy discounts to try to make a profit from an underpriced job. They undermine the profitability of the entire industry, cheapening work and rental rates, not paying bills. Can you guess I have been trying to get money out of one of these people today!

[ImagineerTom]

I know it sounds overly simple but honestly, the best thing we ever did was introduce a zero tolerance policy on invoices and accounts.

New customers pay in advance, no exceptions.

Existing customers get various agreed payment terms, 24hours after they are officially overdue there's a small claims court form through their letterbox and we revoke their credit facilities ie if they want to use us again they have to pay in full up front.

 

It sounds harsh but overall we've not lost any significant amount of business because of this policy and if we have it's more than offset by the interest cost savings, phonecalls & chase up paperwork, messing around, accounting difficulties and above all stress and headaches persistant late payers cause.

 

Lets not forget that in our industry the ultimate consumer will have paid in advance (you can't buy theatre/concert/festival/conference tickets "on account") so by the time the show starts the money is there already and "someone" is sitting on it and deriding interest and benefit from it whilst others further down the chain are left waiting to be paid, if it takes longer than 30 days after the event to get the money from ticket revenue in to suppliers pockets then it's purely because someone somewhere is taking the piss.

[emsgeorge]

I've got one who in the summer, booked a control room trailer, event cctv system, and radios.

 

First time you have used us, so money up front please. No worries they said.

 

A week before the event, and I am still chasing.

 

After some quite forward emails, the cash got paid in, over the counter, to the account, on the Thursday afternoon. The kit was due 6am Friday morning on site.

 

Then they moaned when the CCTV wasn't completed on time - due to the scaffold suppliers knowing nothing about having to put poles up, and the power company knowing nothing about having to supply 16a to each pole. The client was 'organising' this. We then had to do a 50 mile round trip to go and get some scaff and trs from base, hence the 3 hour over run.

 

We never got the £300 we billed them for the extra kit.

[paulears]

I rather like the discount idea, although it won't sit early with my accounts system, but the idea is a good one. In this case, I've been bitten just once too often. The guy who calls me is very nice, and a complete technophobe, and I even try to give them the answers over the phone to save me a visit, but he always apologises and I feel genuinely sorry for him. You can't keep doing it for ever, can you?

[bigclive]

I've used the "early payment discount" thing. The invoice had the discount termination date on it, so it basically said deduct 10% if paid before 25/12/14. One particular customer never made the payment date and just paid the full amount.

[slipstream]

I also do the discount thing for free or mate rate jobs - it reminds them that the work was worth X even though they didn't have to pay that much - and prevents the organisation thinking it should always be that cost. Plus if you do have to go to court the discount show is always for payment within 14 days so you can look for the larger amount.

[paulears]

How do you reconcile the difference in your accounts? If I raise an invoice near vat time I'm going to pay the vat on the total. So I'd have to create some kind of balancing payment?

[Brian]

I rather like the discount idea, although it won't sit early with my accounts system...

 

If you're VAT registered then it starts to get 'interesting' doing this sort of discount.

[Simon Lewis]

From VAT guide 700.... Seems to be slightly in our favour?

 

edited to correct formatting

 

 

7.3.2 Discounts

The following rules apply if you offer discounts to your customers.

(a) Unconditional discounts

If

you offer a customer an unconditional discount

and

the customer pays the discounted amount

then

the tax value is based on the discounted amount

(b) Discounts for prompt payment

If

you offer a discount on condition that the customer pays within a specified time

then

the tax value is based on the discounted amount even if the customer does not take up your offer

but

if your terms allow the customer to pay by instalments, the tax value is based on the amount the customer actually pays

© Contingent discounts

If

you offer a discount on condition that something happens later (for example, on condition that the customer buys more from you)

then

the tax value is based on the full amount paid

If the customer later earns the discount, the tax value is then reduced and you can adjust the amount of tax by issuing a credit note (see paragraph 18.2)

[paulears]

Now that - I can cope with, Thanks Simon. So you sort of get a bonus if they are late paying the full amount? That's good.

[Simon Lewis]

... So you sort of get a bonus if they are late paying the full amount?

 

It certainly seems that way!!

 

 

 

[kerry davies]

It's not that much of a bonus from the HMRC point of view, Paul.

 

In overly simple terms it means you get a 20% bonus on the difference, your profits are boosted, you pay 20% income tax on that extra profit.