How to become a bank....
Discussion
Start a small service business, so can't send products after payment.
Await December. Clients will instruct, but then not pay as they've gone Christmas shopping. It seem's that the job that was so urgent (I've not released documents yet), suddenly is not so urgent....
Await January. Observe clients receiving reminders, checking invoices and doing err nothing.
Await February. Maybe clients will start to pay.
grrrrrrrrrr. Happy New Year Folks!
Await December. Clients will instruct, but then not pay as they've gone Christmas shopping. It seem's that the job that was so urgent (I've not released documents yet), suddenly is not so urgent....
Await January. Observe clients receiving reminders, checking invoices and doing err nothing.
Await February. Maybe clients will start to pay.
grrrrrrrrrr. Happy New Year Folks!
I'm a Surveyor, but about 70% of my business is providing Lease Plans.
Some plans go out on invoice, some don't go out until I have payment.
A number of clients this year have come up with a new wheeze and have decided that now the plans are ready they can manage without them..... That combined with the corporates whose accounts departments shutdown for 2 weeks.....
Then there's the client who told me about 60 day payment terms after the invoice was issues (I've sorted that one out!).....
it's all good fun!
Some plans go out on invoice, some don't go out until I have payment.
A number of clients this year have come up with a new wheeze and have decided that now the plans are ready they can manage without them..... That combined with the corporates whose accounts departments shutdown for 2 weeks.....
Then there's the client who told me about 60 day payment terms after the invoice was issues (I've sorted that one out!).....
it's all good fun!
We are a small company and some years ago HSBC owed us £350,000 in overdue invoices some dating back 3 years.
Spare me the lecture 'why' (we were making shed loads from HSBC and cash flow was brilliant at the time, however I know it was and could have been a costly mistake).
It got to a point of clashing heads and I was told (in an email which unfortunately I don't have anymore).....
If you take action against us for the overdue money and we'll drop you as a supplier'
I did and true to their word they did.
I appreciate they're a little bit bigger than us but I hated being their bank!
And as we know, an order isn't an order until it's paid for
Spare me the lecture 'why' (we were making shed loads from HSBC and cash flow was brilliant at the time, however I know it was and could have been a costly mistake).
It got to a point of clashing heads and I was told (in an email which unfortunately I don't have anymore).....
If you take action against us for the overdue money and we'll drop you as a supplier'
I did and true to their word they did.
I appreciate they're a little bit bigger than us but I hated being their bank!
And as we know, an order isn't an order until it's paid for
surveyor said:
I'm a Surveyor, but about 70% of my business is providing Lease Plans.
Some plans go out on invoice, some don't go out until I have payment.
A number of clients this year have come up with a new wheeze and have decided that now the plans are ready they can manage without them..... That combined with the corporates whose accounts departments shutdown for 2 weeks.....
Then there's the client who told me about 60 day payment terms after the invoice was issues (I've sorted that one out!).....
it's all good fun!
For non-account customers take payment in advance of doing the work surely? At the very least 50% up front so your time is covered. That's what we do. Some plans go out on invoice, some don't go out until I have payment.
A number of clients this year have come up with a new wheeze and have decided that now the plans are ready they can manage without them..... That combined with the corporates whose accounts departments shutdown for 2 weeks.....
Then there's the client who told me about 60 day payment terms after the invoice was issues (I've sorted that one out!).....
it's all good fun!
Most of our clients are local authorities and public sector and I have to say, for all the criticism levelled at them, they are excellent payers and over the past two years or so, they've got even better. Some, if we submit and invoice on a Monday, it's in our account by the Friday. And I'm not talking small invoice values either.
The only time we have trouble is when we deal direct with big commercial operators. One very nearly brought us down and the only way I was able to reverse the situation was to hold them to ransom, refusing to distribute a fairly innocuous bit of literature to 200,000 homes that, if it wasn't delivered would have been catastrophic to the company and most probably have brought them down. There was much hair-drying discussion (mainly from their side) pointing out to us that they had the power to take us down. I pointed out that that was going to happen anyway so the threat of non delivery stood and the question was if they wanted to join us at the bottom as well. Got our money that afternoon!
The only time we have trouble is when we deal direct with big commercial operators. One very nearly brought us down and the only way I was able to reverse the situation was to hold them to ransom, refusing to distribute a fairly innocuous bit of literature to 200,000 homes that, if it wasn't delivered would have been catastrophic to the company and most probably have brought them down. There was much hair-drying discussion (mainly from their side) pointing out to us that they had the power to take us down. I pointed out that that was going to happen anyway so the threat of non delivery stood and the question was if they wanted to join us at the bottom as well. Got our money that afternoon!
StevieBee said:
Most of our clients are local authorities and public sector and I have to say, for all the criticism levelled at them, they are excellent payers and over the past two years or so, they've got even better. Some, if we submit and invoice on a Monday, it's in our account by the Friday. And I'm not talking small invoice values either.
Whilst that is to be applauded in some respects (as a supplier certainly), it perhaps shows the difference in commerciality between a local authority/public sector and non-PS businesses.Whilst it's morally and contractually "poor" behaviour to delay payment, and whilst on many occasions it can simply be an oversight or poor admin, many times its a policy decision for cash flow or to maximise profit by retention or simply interest accrued.
One of my large clients enforced upon me a change in terms last year to move to 90 day payment terms and I was over a barrel. Again, this was a multi-national and even though my track record with them is superb, the policy was one covering the entire company structure so I was insignificant in the grand scheme of things and had no seat at the negotiating table. like it or lump it.
The difficulty is getting caught in the middle. My own suppliers (thankfully in my industry they form little part) stand rigid by their own terms of payment and, as a small business of modest value to them I have little weight to flex these. My own clients are global and have the power to dictate to me as they see fit. That can lead to a difficult push me pull me situation for the business sat between them.
Shnozz said:
Whilst that is to be applauded in some respects (as a supplier certainly), it perhaps shows the difference in commerciality between a local authority/public sector and non-PS businesses.
Whilst it's morally and contractually "poor" behaviour to delay payment, and whilst on many occasions it can simply be an oversight or poor admin, many times its a policy decision for cash flow or to maximise profit by retention or simply interest accrued.
One of my large clients enforced upon me a change in terms last year to move to 90 day payment terms and I was over a barrel. Again, this was a multi-national and even though my track record with them is superb, the policy was one covering the entire company structure so I was insignificant in the grand scheme of things and had no seat at the negotiating table. like it or lump it.
The difficulty is getting caught in the middle. My own suppliers (thankfully in my industry they form little part) stand rigid by their own terms of payment and, as a small business of modest value to them I have little weight to flex these. My own clients are global and have the power to dictate to me as they see fit. That can lead to a difficult push me pull me situation for the business sat between them.
Although it's amazing how flexibility there really is in these policies when they really want what you're selling/offering.Whilst it's morally and contractually "poor" behaviour to delay payment, and whilst on many occasions it can simply be an oversight or poor admin, many times its a policy decision for cash flow or to maximise profit by retention or simply interest accrued.
One of my large clients enforced upon me a change in terms last year to move to 90 day payment terms and I was over a barrel. Again, this was a multi-national and even though my track record with them is superb, the policy was one covering the entire company structure so I was insignificant in the grand scheme of things and had no seat at the negotiating table. like it or lump it.
The difficulty is getting caught in the middle. My own suppliers (thankfully in my industry they form little part) stand rigid by their own terms of payment and, as a small business of modest value to them I have little weight to flex these. My own clients are global and have the power to dictate to me as they see fit. That can lead to a difficult push me pull me situation for the business sat between them.
In a past life, we used to not offer credit to anyone, regardless of who they were - not a penny. When we offered something noone else would provide then bank transfers magically appeared to be a distinct possibility
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