Forums: Discussions for entrepreneurs and small business.

This forum is great - and hopefully I can get some advice or help.

Our company does very well in sales and services delivered, growing every month for the past 18.

However, one of the toughest issues we face is slow-paying clients.  Because we are mostly B2B, we deal with almost completely invoicing.  We rarely get stiffed - but some corporate clients are taking as much as 120 or 240 days to pay us and then complain when we do a work stoppage or a shutoff, asking if we really want their business.

Talked to some friends and associates locally who I don`t do business with, and they said that I shouldn`t even consider shutting people off until six months because they themselves take 180-240 days on a regular basis to pay vendors.

In general, we`re constantly running at 120 and shortening it to 45 would really make life easier.

Does anyone in the `nation have any suggestions?  As if this is going to keep happening, or is the norm and I just didn`t know it - I should start initiating the changes that need to be done now.

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"It`s not work, it`s network!"

Portage Media Solutions
http://www.portagemedia.com
My Blog: http://www.interactivemediatips.com

 

I have this same problem because I also work in a service industry.  I think that establishing the ground rules ahead of time makes things simple and there are no questions if you do stop work. 

When I work with other business I have them sign a project agreement outlining our and their responsibilities. 

As far as payment goes I require 50% up front and 50% upon completion.  If you want to give them more incentive you can detail in your agreement that they have 45 days to pay the invoice before you begin to charge penalties for late payment.  This is common in B2B. 

I think that this alone will help increase the speed at which your clients make payment.

Good Luck!

Have you offered a discount for on-time payments?  We used to work with a vendor who offered a percentage off the price if we had it IN THEIR HAND by 5pm on the day it was due.  Some companies will still ignore it, but the smart ones will understand that 3% is 3% they add to their bottom line.

B2B is hard because everyone tries to float.  It can be frustrating if you`re on the receiving end. 

~Kim

 

I think 120-240 days is way out of hand and it is really taking advantage of you.  I can understand maybe going to 45-60 days on net 30 terms, but 4 to 8 months is abusive.  In my past corporate life, paying and getting paid rarely went above the 50 day range.  It is quite common for big businesses to push their accounts payable into the 45+ day range as a rule, but on the other hand if we had clients that were paying us over 120 days late we would assume they were having financial problems and cut them off from doing business with us until they both paid off their balance and could prove to us they were credit worthy.  I would confront them, what could be their defense?  It may be some business you have to walk away from.  Tough decision good luck. 

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Stay tuned...coming soon

The longest my customers are given is 30-days.  Clients that consistently float are then followed-up regularly for payment.  Cash flow is king and floating takes a company down more than anything.  My business is small and I don`t have the resources to work as a charity.

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Loose them!!!!
They are not worth it. slow pay customers are stealling your money and your time!! let them know that you are not a bank. These guys are using your money for 4 to 5 months for free that is @#$!@!. Try not paying your mortgage or rent for that period of time. Slow Pay is almost as bad as no pay. If someone can`t afford to pay on time then they can not afford the product. They will put you out of business
Let me know if you want to know how I really feel.   

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rock on

You clients are asking you to finance their business.

I recommend contacting Hennessey Capital.  They can both analyze your AR and recommend some solutions as well as finance your AR so you don`t have to wait as long.

I work for a sister company, InStream Financial, which does a similar thing for supply chains--except we don`t provide any business consulting.

Call `em a call or send `em an email.  They`ve locations in Boston, Tampa, and Detroit.

Have you considered selling your accounts receivables?  In most situations, for a very small percentage, you can receive regular monthly checks from investors.  This is a great solution currently used by medical clinics, hospitals and other B2B providers.  This allows them to move forward with building their business through capital expenditures and providing services - not worrying about when the next payment will let them continue.

If you would like more information, I`m happy to provide options for you!

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Cheri
Aegis Associates, LLC
"Intelligent Payment Processing Solutions"

www.checksyes.com

I realize I`m joining this conversation a little late, but here are some ideas for improving receivables:

1. Establish the terms before providing services.
This ensures everyone knows what is expected, and should include any late payment fees or early payment incentives.

2. Institute—and bill—late payment fees.
If clients routinely are 45+ days out, start billing late fees (generally 2-5%). This sends the message that you are serious about getting paid.

3. Create—and execute—a collections plan.
I begin with a polite email reminder at 15 days late, then follow up with a friendly phone call. If that doesn`t work, I send out a 30 Day Past Due notice, then a 45 Day Past Due notice, then a 60-Day Collections notice, then they go to a collection agency.

4. Get comfortable talking about money.
You should know how to toe the line between being polite and being firm. Do not let others dictate how you run your business—granted, staying flexible is important, and some larger corporate clients may be worth the cash flow crunch now and then, but for the most part you need to do what you need to do to keep your doors open. That means finding clients who aren`t deadbeats and giving up those who are.

-Jess


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Roughstock Studios | Notes From the Rodeo | Newsletter
Strategic communications without the selling of souls.

Hey All,

Thanks for posting Jess, it reminded me to do an update.

First, I got a lawyer.  Best move - as unfortunately, I`m learning lots of people will be glad to not pay you as long as they can; and a letter from a law firm usually works to be a motivator.  Also, we now demand 50% payment up front via credit card or check, no matter who you are.  That way, even if it`s a large company, we`re in their system.

We`ve collected on some - and some are going to court shortly unless they pay up.  I`m also finding among my network of friends that they`re seeing the same issues too, and more so lately, especially clients in-state (Michigan).  They`re seeing no-pay rates double and triple for the first time in decades, so it just means it`s time to be extra cautious.

Checksyes, send me a PM - I know you left a voicemail - some debts are smaller, some larger - but I`m really looking at ideas for factoring with some of the larger clients that are coming in.

DMStone, I appreciate your feelings on this


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"It`s not work, it`s network!"

Portage Media Solutions
http://www.portagemedia.com
My Blog: http://www.interactivemediatips.com