SMALL BUSINESSES BETTER AT PAYING INVOICES ON TIME?
Discussion
Hi there,
As above, really.
If I'm about to go to market with web design - focusing on very small outfits/one-man bands & some medium (e.g. plumbers, electricians - & at most hauliers) - do you think the fact that they're in business themselves and will have a very direct understanding of the importance of paying invoices on time - will mean that this sector should prove that much more reliable in terms of invoice-payment (£100/£200 on average) to me?
A moot question, I know - as no matter what the answer - I do want to do this, and there's only one way to find out - but am interested in any opinions and experiences people have had. It will at least help me prepare for how much time I'll have to allocate for chasing payment.
Thanks in advance, as ever.
Arif
As above, really.
If I'm about to go to market with web design - focusing on very small outfits/one-man bands & some medium (e.g. plumbers, electricians - & at most hauliers) - do you think the fact that they're in business themselves and will have a very direct understanding of the importance of paying invoices on time - will mean that this sector should prove that much more reliable in terms of invoice-payment (£100/£200 on average) to me?
A moot question, I know - as no matter what the answer - I do want to do this, and there's only one way to find out - but am interested in any opinions and experiences people have had. It will at least help me prepare for how much time I'll have to allocate for chasing payment.
Thanks in advance, as ever.
Arif
Speaking as the owner of a small business myself (albeit in an unrelated field), I think you're right in your assumption that we tend to pay on-time because we know what it means to be late.
However, you should bear in mind that if a small business normally pays on time and then suddenly doesn't - it won't be because Sharon in accounts is on holiday, or the system broke etc. (ie. fobbing you off for the fun of it). More likely there will be a real reason why they CAN'T pay you at that time - probably their own cash-flow problems.
However, you should bear in mind that if a small business normally pays on time and then suddenly doesn't - it won't be because Sharon in accounts is on holiday, or the system broke etc. (ie. fobbing you off for the fun of it). More likely there will be a real reason why they CAN'T pay you at that time - probably their own cash-flow problems.
For that type of sector and those amounts you are going to have to be tight from day one.
£100 is not worth chasing up through the courts (unless you are really that way inclined), and to get to that point where you threaten this will need a lot of letter sending, which is your stationary costs and stamps.
So, your bill could be 'ignored', leaving you with a real possibility that a good proportion of your time is spent chasing relatively small sums where you should be making money.
I would suggest this, lets say your usual price for the work would be £100.
Quote your customer £200 and give them a 50% discount for early payment within 7 days - make this clear from the outset verbally and on the invoice.
There are always going to be the tiny percentage who will set out to screw you from the start - very tiny. But for the rest, they will make every effort NOT to forget to pay you!
£100 is not worth chasing up through the courts (unless you are really that way inclined), and to get to that point where you threaten this will need a lot of letter sending, which is your stationary costs and stamps.
So, your bill could be 'ignored', leaving you with a real possibility that a good proportion of your time is spent chasing relatively small sums where you should be making money.
I would suggest this, lets say your usual price for the work would be £100.
Quote your customer £200 and give them a 50% discount for early payment within 7 days - make this clear from the outset verbally and on the invoice.
There are always going to be the tiny percentage who will set out to screw you from the start - very tiny. But for the rest, they will make every effort NOT to forget to pay you!
(£100/£200 on average)
How are you ever going to make any money! how many hours do you think you will spend on a 'web design' for £100 or £200? Even if you are doing a 5 page static site surely you can't do it for £200, unless your hourly rates are really low?
On the payment question, we've found the smaller companies take longer to pay, they often can only pay if they get paid. Whereas larger organisations tend to just pay their account at the end of the month. Smaller one man bands look at it as their money they are paying you, but larger companies '(Sharon in accounts)' don't see it the same way they just do the cheque run each month as part of their job.
How are you ever going to make any money! how many hours do you think you will spend on a 'web design' for £100 or £200? Even if you are doing a 5 page static site surely you can't do it for £200, unless your hourly rates are really low?
On the payment question, we've found the smaller companies take longer to pay, they often can only pay if they get paid. Whereas larger organisations tend to just pay their account at the end of the month. Smaller one man bands look at it as their money they are paying you, but larger companies '(Sharon in accounts)' don't see it the same way they just do the cheque run each month as part of their job.
From experience I'd say that the size of the company doesn't necessarily bear any relation to how quickly you'll be paid. As a small business ourselves, we often use freelance staff, and I always try to pay them as soon as I receive their invoice, just so they'll be more than happy to work for us in the future.
It depends upon whether you decide to extend credit anyway. You are well within your rights to ask for payment on completion.
A web designed I used in the recent past used to take 50% up front, with the remainder on completion. Only then did they release the website to me. I was able to view it through the whole development phase, but it wasn't published until I paid up.
It probably wouldn't hurt you to take this approach.
It depends upon whether you decide to extend credit anyway. You are well within your rights to ask for payment on completion.
A web designed I used in the recent past used to take 50% up front, with the remainder on completion. Only then did they release the website to me. I was able to view it through the whole development phase, but it wasn't published until I paid up.
It probably wouldn't hurt you to take this approach.
Yep have to agree with Paul on this £100 - £200 forget it. We started of on this very track and it was just not worth it. Our hosting (which I have to say is sh1t hot) is £49.99 a year alone and thats excellent value, add in full SEO and Submission + design and build + stock photography and custom PHP / MYSQL scipts, office overheads and average build time of 3 - 5 days work. GOOD LUCK MATE. and NO they dont always pay on time either
Regarding your pricing, which appears to be taking up a bit of this thread, I understand why you're wanting to charge a low price for your services, as you're aiming at the little guys who can't (probably, but you should really find out) afford the going rate.
This is Ok initially, as it'll get you a customer base from which you can develop. It also means you can point prospective clients to your existing work to demonstrate your prowess.
However, the flip side of this is that such low prices will, in all likelihood, put off a large proportion of the slightly bigger businesses who will discount you for being too cheap. Remember that £200 isn't a small amount of money even for a company with a handful of employees, and they won't want to risk it on a service that may not be good enough. (Not saying that your service wouldn't be good enough, but a really low price CAN give that impression).
Is this making sense?
This is Ok initially, as it'll get you a customer base from which you can develop. It also means you can point prospective clients to your existing work to demonstrate your prowess.
However, the flip side of this is that such low prices will, in all likelihood, put off a large proportion of the slightly bigger businesses who will discount you for being too cheap. Remember that £200 isn't a small amount of money even for a company with a handful of employees, and they won't want to risk it on a service that may not be good enough. (Not saying that your service wouldn't be good enough, but a really low price CAN give that impression).
Is this making sense?
jamesuk28 said:
Yep have to agree with Paul on this £100 - £200 forget it. We started of on this very track and it was just not worth it. Our hosting (which I have to say is sh1t hot) is £49.99 a year alone and thats excellent value, add in full SEO and Submission + design and build + stock photography and custom PHP / MYSQL scipts, office overheads and average build time of 3 - 5 days work. GOOD LUCK MATE. and NO they dont always pay on time either
Another one agreeing here. I actually find that smaller the company the slower they pay.
Good luck, though, nothing better than the first cheque you get in.
V8 EOL - Rich said:
Get 50% up front and you know then they are serious.
Rich beat me to it.I've worked for small and large companies (paying the bills) for nearly 20 years and both have their pros and cons.
Small companies tend to know who they owe money to, but they can also have a tighter cash flow, meaning if they don't get paid, it's difficult to pay their suppliers. As someone who has already provided a service, unlikely to cause a fuss or not an absolutely necessary part of the business (ie. not supplying parts needed to complete a customers job) your debt will not be a priority if money is tight, so you may have to wait for payment.
Large companies however, tend to be unwilling to pay bills that could be for "anything". In a large company, they tend to keep a tighter control over spending as there are many employees, and some of them could be on the take. The accounts departments tend to have a larger quantity of staff who are not involved in how the money is actually spent, they literally just put the invoices on a computer once someone else has told them to. They are usually low paid and the quantity of invoices they are expected to process is high. Without an order number, your invoice will be forwarded onto the person who placed the order to be authorised. If they're not in the office often or are constantly struggling to meet deadlines, this could mean your invoice sitting on their desk for weeks, or disappearing under a pile of paperwork and if you don't chase it, and the accounts clerk is having a bad day and doesn't much feel like walking over to talk to the person concerned so they can sign the invoice when they're around, then it could take months for you to get your money.
In my opinion, you're best off asking for a 50% deposit or using proforma invoices and insisting on full payment before doing any work for your customers.
As a small business I have no systems for knowing when bills are over-due and therefore, with the exception of the tax man, I pay on the day the invoice arrives and my bills are not so large that the advantage of having good relations with suppliers knowing they will be paid immediately probably outweighs the lost interest of playing the '28 day rule'
Probably better to really spell out when you expect to receive payment. Keep it blatantly clear then no confusion can arise on your part or your customers. If they know that you expect payment within 28 days or penalties or similar will arise then everyone knows what they're getting in to. Don't put it in small print, make it nice and obvious. Most people pay up well and on time, but now and again things get put to one side and people take their eye off the ball. Give them a little room to manouevre, but not too much! Of course asking for 50% upfront you have to deliver and they may be expecting _you_ to get the work done right on time and to spec or they'll be expecting to levy penalties on you, it could work both ways!!
Gordon Brown said:
As a small business I have no systems for knowing when bills are over-due and therefore, with the exception of the tax man, I pay on the day the invoice arrives and my bills are not so large that the advantage of having good relations with suppliers knowing they will be paid immediately probably outweighs the lost interest of playing the '28 day rule'
Anybody else spot the irony of the posters' name and his comments? 
Brilliant stuff guys (& girls?)!
Thanks for the caveats, encouragement, and to-be-expected erudition from all of you.
Firstly for anyone thinking in terms of SQL, CSS, SEO - even HTML - this is not where I am! The software I use writes code for me and produces some very slick-looking websites, that are functional as far as their remit extends, and reliable - as far as £25/yr will buy you in reliability of hosting (98%). There are loads of 'boil-in-the-bag' web design programs out there - some better than others. Yes - I would be turfed out on my ear of any web design conference - but this is about the end product. E.g. www.trevorpye.websitemockup.co.uk
www.curryandnaan.websitemockup.co.uk
www.grangeparkdirectory.websitemockup.co.uk
www.beyond-expectations.co.uk
www.lucentlens.co.uk
www.changeyourlightbulbs.info
You can probably tell which ones are from when I was first getting to grips with the program - and which once slightly more familiar with it. I'm still only 30% of the way into its full potential.
Not naming the program as I'm tired of the flack that 'proper' web designers throw at it - but yes, it does do everything for me - but heck - this shaves 80% off the time it would otherwise take to build - and I intend to pass this cost/time saving on to my customers.
2) The kind of people I'm looking to help are what I would call the very reciprocal of the kind of clientele the Jamie Beestons & UKBobs of the world are used to helping. I am indeed talking about static websites - starting at £100 for up to 11 pages. If anyone's interested in the full model they can check out www.websitesmadeaffordable.co.uk in a few week's-time - when hopefully in between the day-job and 7-month old - I'll have had time to finish it. I’m not relying on it to generate business - as I'll mainly be approaching leads directly and then hopefully gaining referrals - but I do have to have a Web-presence. And yes - all the concise names were gone!
So the market I'm aiming at would merely be after a basic web presence - but which looks good - and dedicated e-mail (I really think it looks silly and unprofessional when a business has a BTConnect or AOL e-mail as their contact - some even have websites!). They would need nothing more than the lightest e-commerce, if that (Paypal easily integrated) – and won’t need to continuously update content. Anything more than this – then I don’t think what I do would be appropriate – e.g. the servers are not guaranteed more than 98% - which is 2% too much for an e-commerce outfit. I’d refer these to a friend that does do the full-deal, with hosting that can be what you need, & pay for.
These people for example have lovely new vans, new livery and graphic design they've put a lot of thought into - but no website. Clearly - they've looked at the going rates - looked at what they would want a website to do for them (i.e. NOT MUCH - just the kudos of having a website and information-point for customers, and an easily-memorable name to remember as the van passes by. It's odd these days not to have a website) - & decided that it's not worth it - basic CBA.
However - I'm willing to bet and hoping that whatever value they did assign to having a website done would be much closer to my price-points (max £300). These people get to benefit from software and websites that do all that they would want a website for. And I don't think that even this sector would be naive enough to think that having a site will magically lead to loads of business - without spending money (on what we call SEO). I make this clear anyway.
3) On payment - excellent help going on here. I had already planned on the client having full access to a site that's only any use to them alone - subdomained to my demo-domain websitemockups.co.uk - asking for nothing up-front - and then only releasing the site on to the domain they chose once fully paid (DNS-pointing - none of this web-forwarding lark). It should hopefully be enough to seduce them into paying.
I am banking on trusting most people to have been serious about the order and pay up – and if anyone takes the mick and gets bored of the project-request in the first-place, having seen their site up and running – then I’ll just absorb these. I can always chase them later and ask if they’d like their website switched on now. I’m planning not to have to demand anything up-front – I want that to be one of my USP’s when they tell their friends about me.
4) Making money – partly explained already. A 5-page website, when I’m on form and ‘in rhythm’ with the program – will take about 2 hours or under. I don’t use templates – but as you can see – my imagination is all that limits things! But heck – you get what you pay for! What I haven’t worked out is the ‘full cost’ – including prospecting-time and discussion-time with them – but I intend to streamline all of that too.
5) As to cheap equating to nasty – this is indeed a good point – but given that all my ‘service’ is is the creation and publishing of a basic website/Web presence – all anyone has to do is look at either my own site or those of ones I’ve done, and then the fear should be allayed, because the design, look, feel, finishing and functionality is all I’m being assessed on. What you see is what you get.
If I get a few tanks of diesel a week out of this venture I’ll be happy – as I love bringing the Web to those who thought it was out of reach – and if it takes off, then all the better.
Many 'real' web designers will baulk & nauseate at the entire proposition - however I don't have time to worry about what real web designers will think of me. Some large corporations and respected outfits apparently use this very program, as it is so versatile.
That’s it! I thought I owed a decent response in return for the collective time taken over this thread to help me out.
Thanks for the caveats, encouragement, and to-be-expected erudition from all of you.
Firstly for anyone thinking in terms of SQL, CSS, SEO - even HTML - this is not where I am! The software I use writes code for me and produces some very slick-looking websites, that are functional as far as their remit extends, and reliable - as far as £25/yr will buy you in reliability of hosting (98%). There are loads of 'boil-in-the-bag' web design programs out there - some better than others. Yes - I would be turfed out on my ear of any web design conference - but this is about the end product. E.g. www.trevorpye.websitemockup.co.uk
www.curryandnaan.websitemockup.co.uk
www.grangeparkdirectory.websitemockup.co.uk
www.beyond-expectations.co.uk
www.lucentlens.co.uk
www.changeyourlightbulbs.info
You can probably tell which ones are from when I was first getting to grips with the program - and which once slightly more familiar with it. I'm still only 30% of the way into its full potential.
Not naming the program as I'm tired of the flack that 'proper' web designers throw at it - but yes, it does do everything for me - but heck - this shaves 80% off the time it would otherwise take to build - and I intend to pass this cost/time saving on to my customers.
2) The kind of people I'm looking to help are what I would call the very reciprocal of the kind of clientele the Jamie Beestons & UKBobs of the world are used to helping. I am indeed talking about static websites - starting at £100 for up to 11 pages. If anyone's interested in the full model they can check out www.websitesmadeaffordable.co.uk in a few week's-time - when hopefully in between the day-job and 7-month old - I'll have had time to finish it. I’m not relying on it to generate business - as I'll mainly be approaching leads directly and then hopefully gaining referrals - but I do have to have a Web-presence. And yes - all the concise names were gone!
So the market I'm aiming at would merely be after a basic web presence - but which looks good - and dedicated e-mail (I really think it looks silly and unprofessional when a business has a BTConnect or AOL e-mail as their contact - some even have websites!). They would need nothing more than the lightest e-commerce, if that (Paypal easily integrated) – and won’t need to continuously update content. Anything more than this – then I don’t think what I do would be appropriate – e.g. the servers are not guaranteed more than 98% - which is 2% too much for an e-commerce outfit. I’d refer these to a friend that does do the full-deal, with hosting that can be what you need, & pay for.
These people for example have lovely new vans, new livery and graphic design they've put a lot of thought into - but no website. Clearly - they've looked at the going rates - looked at what they would want a website to do for them (i.e. NOT MUCH - just the kudos of having a website and information-point for customers, and an easily-memorable name to remember as the van passes by. It's odd these days not to have a website) - & decided that it's not worth it - basic CBA.
However - I'm willing to bet and hoping that whatever value they did assign to having a website done would be much closer to my price-points (max £300). These people get to benefit from software and websites that do all that they would want a website for. And I don't think that even this sector would be naive enough to think that having a site will magically lead to loads of business - without spending money (on what we call SEO). I make this clear anyway.
3) On payment - excellent help going on here. I had already planned on the client having full access to a site that's only any use to them alone - subdomained to my demo-domain websitemockups.co.uk - asking for nothing up-front - and then only releasing the site on to the domain they chose once fully paid (DNS-pointing - none of this web-forwarding lark). It should hopefully be enough to seduce them into paying.
I am banking on trusting most people to have been serious about the order and pay up – and if anyone takes the mick and gets bored of the project-request in the first-place, having seen their site up and running – then I’ll just absorb these. I can always chase them later and ask if they’d like their website switched on now. I’m planning not to have to demand anything up-front – I want that to be one of my USP’s when they tell their friends about me.
4) Making money – partly explained already. A 5-page website, when I’m on form and ‘in rhythm’ with the program – will take about 2 hours or under. I don’t use templates – but as you can see – my imagination is all that limits things! But heck – you get what you pay for! What I haven’t worked out is the ‘full cost’ – including prospecting-time and discussion-time with them – but I intend to streamline all of that too.
5) As to cheap equating to nasty – this is indeed a good point – but given that all my ‘service’ is is the creation and publishing of a basic website/Web presence – all anyone has to do is look at either my own site or those of ones I’ve done, and then the fear should be allayed, because the design, look, feel, finishing and functionality is all I’m being assessed on. What you see is what you get.
If I get a few tanks of diesel a week out of this venture I’ll be happy – as I love bringing the Web to those who thought it was out of reach – and if it takes off, then all the better.
Many 'real' web designers will baulk & nauseate at the entire proposition - however I don't have time to worry about what real web designers will think of me. Some large corporations and respected outfits apparently use this very program, as it is so versatile.
That’s it! I thought I owed a decent response in return for the collective time taken over this thread to help me out.
Edited by Arif110 on Friday 12th October 12:09
Gassing Station | Business | Top of Page | What's New | My Stuff