Keeping late payers?

[anonymous-user]

Hey Everyone,

I was just wondering what everyones opinions are:

I have a client that that pays 2.5 * the average per completed product ( no physical costs, but all mental ifyswim ) . That's great. However they are diabolical at paying. Six month payment schedules are not uncommon. I have to endlessly chase, and rarely get a reply but they do eventually pay. It is a lot of houding. I am still owed several thousand from before July.

I am tempted to drop these clients but they pay well. I am just interested to know other peoples opinions.

[akirk]

You have to make decisions based on each client - I have some clients who have been with me for many years- payment speed varies and can delay but I know their business well and understand the cash flow patterns they have- it helps them for us to do the work and for them to sometimes pay later - but they are honest and always pay - they don’t get our prompt payment discount but are happy with the flexibility... others pay within hours of getting the invoices and I have one who chases me to send her invoices so that she can pay - she hates being late

A mix of people and for each I understand how they behave - if a client takes the mickey then they are dealt with differently but if there is honesty and eventual payment then I am flexible - helps to have a cash flow to allow it...

[psi310398]

ChocyLint1 said:

Hey Everyone,

I was just wondering what everyones opinions are:

I have a client that that pays 2.5 * the average per completed product ( no physical costs, but all mental ifyswim ) . That's great. However they are diabolical at paying. Six month payment schedules are not uncommon. I have to endlessly chase, and rarely get a reply but they do eventually pay. It is a lot of houding. I am still owed several thousand from before July.

I am tempted to drop these clients but they pay well. I am just interested to know other peoples opinions.

Would it help you be a little more forgiving if you considered that the 2.5 * the average cost to your client implied a certain cost of carry i.e. is your customer not paying, even if not explicitly, for an extended credit facility? Just a thought.

[Lemming Train]

It can be a slippery slope and your generosity/flexibility over when they pay the bill can come back to bite you hard if they unexpectedly go pop or just decide to stop paying altogether. You're then thousands or tens of thousands out of pocket and you risk your own business going pop if you can't pay your own suppliers upstream. There is no right or wrong answer as only you know the customer. You have to balance the risk of losing it all with getting 2.5x the market rate when they eventually pull their fingers out of their collective arses and pay the bill. If you have enough cashflow coming in reliably from your other clients to pay your own staff, suppliers and running costs then I'd probably throw caution to the wind and leave them to it at 2.5x market rate. If you're relying on that money, well, you have a tough decision to make!

[Wombat3]

Have you looked at factoring?

[Lemming Train]

Wombat3 said:

Have you looked at factoring?

Factoring is a con, plus if they've got a credit history for being tardy with payments they won't touch them.

[anonymous-user]

why not offer them a small discount - say 1 or 2% - to pay quicker

[steveo3002]

yeah id slip a bit more on top £££ to cover the hassle

[Simpo Two]

If they pay 2.5x more than the going rate/your other clients I'd live with it. That's a heck of an investment return!

[2 sMoKiN bArReLs]

Keep the client but ask for a deposit. (If you are going to dump them anyways nowt to lose).

[jammy-git]

Sign up for GoCardless and get them to agree to sign up before starting the next bit of work/buying the next product.

Up your prices by 10-100% and then offer a 10% discount for paying early/on time.