Late payment

[williaa68]

I am owed a substantial sum - at least by my standards - about £20k - by a large bank. I do a fair bit of work for them - they are my third biggest customer, about 15% of my turnover and the people I deal with are lovely but the procurement people are a nightmare. If they don’t pay me by 31 December then I am going to have to inject a directors loan to pay my corporation tax bill. By 31/12 the invoice will be almost 60 days overdue.

I appreciate I can invoice them for interest but I wonder if anyone has ever done this? It isnt really the interest I want but someone to pay me! I’ve marked the payment as overdue in the online system and am slightly worried that sending a new one might just restart the clock.

Thoughts / advice appreciated.

[Simpo Two]

Tricky; big wheels grind slowly and sometimes if your invoice is timed wrong it will be 'end of the following month'. And you don't want to annoy your customers (though you could badger 'accounts payable' or whatever they're called these days). My simple boring answer is to build up bigger reserves so you can pay bills without being depending on getting paid quickly. At least if you have an official order and there is no dispute over your work then you will get paid, eventually!

[sparkythecat]

Current bank savers rates are about 1.5%
On £20k over the months, that would be less than £100.
Is it worth upsetting one of your bigger clients for such a small amount?
Let it go and just pad their next invoice a bit.

Edited by sparkythecat on Thursday 26th December 11:26

[DSLiverpool]

Don’t react emotionally, I know that’s hard to say as I know your pissed off believe me I get it but keep the client onboard and think tactically.

If you have to work to a deadline that’s always a good payment milestone.

Don’t think your lovely contacts can’t speed things up either, I was pleased last week when a huge plc division we work for paid a very late invoice when we told the creatives they would miss their deadline - it was paid next morning.

Don’t throw the baby out with the bath water.

[snuffy]

sparkythecat said:

Current bank savers rates are about 1.5%
On £20k over the months, that would be £100.
Is it worth upsetting one of your bigger clients for such a small amount?
Let it go and just pad their next invoice a bit.

1.5% is the rate you would get as a saver at a bank so it's not relevant to an overdue business debt.

The rate you can charge is called Statutory Interest and it's the base rate + 8%, so 8.75% currently. And you pro rata it, so £20k comes out at (£20,000 * 0.0875) * (60/365) = £287.

https://www.gov.uk/late-commercial-payments-intere...

I've claimed it in the past and I what I found is that it concentrates the mind of the debtor. In all cases they agreed to pay if I dropped the interest claim. I think I've had to do it with two companies, both of which I never worked for again, but then that was fine by me.

The trouble is, once a company starts paying late, I lose all trust so I'm reluctant to work for them anyway. But you need to find out why it's so late; often it's because someone has not ticked the right box, or there's so perceived problem at their end which may or may not be the case.

What I have found with procurement departments is that they are staffed by lazy bds. So if there is a problem, they do not bother to tell anyone. They just enter "stop" mode - they only "ack", they never "nack".

[Simpo Two]

DSLiverpool said:

Don’t think your lovely contacts can’t speed things up either, I was pleased last week when a huge plc division we work for paid a very late invoice when we told the creatives they would miss their deadline - it was paid next morning.

Don’t throw the baby out with the bath water.

At this stage I'm with DSL. Even the biggest outfits are staffed by human beings who decide whether they will do something or not. If you were late in paying, say, your gas bill and the gas company said 'Right you fker we've slapped 8% interest on top to teach you a lesson' I doubt you'd be more inclined to pay them, and you'd certainly change providers next time. So it can be handy to put yourself in their shoes before piling in.

The statutory interest thing is a great idea from swivel servants who've never run a business. Add it on to a court summons by all means because by that time diplomatic relations are over, but not before. Play the long game.

[Steve H]

^^^^

I’m with the last couple of posts. I do some work for a national company that was very poor at paying so I got to a point where they phoned me up to do a job and I apologised that I couldn’t take any more work on from them because their way of paying made it unsustainable.

I soon got a call from their accounts dept not only to get up to date but (more importantly) to set up a reliable system from that point forward.

Be friendly, be polite, be clear that you can’t work this way.

[VEIGHT]

It’s a horrible situation to be in especially as it is such a big chunk of your business.

If the margins are good (when they do pay) it’s worth keeping them onside though.

Do you have the contact details for the department / person that is responsible for the payment? Calling and asking them directly and even explaining that you need to inject personal cash to cover their late payment would help.

What have you done so far to get the payment?

[snuffy]

VEIGHT said:

Calling and asking them directly and even explaining that you need to inject personal cash to cover their late payment would help.

I would not do that. That has got nothing to do with nothing.

The payment should be made on time, as per the contract. Your personal circumstances are not relevant.

[MrOrange]

I have a couple of poor/late paying clients and whilst I don’t charge them interest, I do “put them on credit stop” which means all work stops and doesn’t start till a day or two after the payment arrives. That seems to focus the mind.

However, end of December due dates are pretty terrible as often the required “approvers” are on break. I’d suck it up this time but maybe change your payment terms.

[VEIGHT]

snuffy said:

VEIGHT said:

Calling and asking them directly and even explaining that you need to inject personal cash to cover their late payment would help.

I would not do that. That has got nothing to do with nothing.

The payment should be made on time, as per the contract. Your personal circumstances are not relevant.

I think it depends what you want the outcome to look like.

If you want to make a point, teach them a good lesson on late payment then your method is great and like you say they’ll never use you again. If you want to still earn money from the client moving forward (and it sounds like a big chunk of this persons turnover) then asking for the money is a better approach I find.

Unfortunately some businesses will only pay when chased and asking directly will put you the the top of the queue. Most likely is that they haven't realised it’s due or they think they can get away will not paying for while.

Once they get used to your chasing you’ll find you don’t have to anymore and they’ll just late pay someone else who doesn’t ask for it.

[Steve H]

VEIGHT said:

Once they get used to your chasing you’ll find you don’t have to anymore and they’ll just late pay someone else who doesn’t ask for it.

This is the essence of the solution.

[Drawweight]

I deliver milk to various biggish companies and in general I find their payment systems to be crap.

They’ll be up to 3 months late, pay 2 months together and miss out one month.

I mean how difficult is it to have a system where you input a bill and it gets paid on time and in sequence?

One of those times where it actually is more difficult to do it wrong.

[Malcolm Feth]

"Once they get used to your chasing you'll find you don't have to anymore"
I will be surprised that this will be the case. I think it is more likely they won't pay on time ever again.

Think about why this happens, why they don't pay you on time in the first place. It is an art of negotiation and empathy to understand why this happens in the first place and how you can get your money on time, every time. It is about boundaries. If they see you are still working for them, despite the fact they haven't paid... why they should care? You will do it anyway, and they will pay you later when it's convenient for them... or maybe never.
Look on the delay in your payments... does it gradually take them longer and longer?

A well-calibrated email or conversation should sort things out, but you need to focus on the problem and explain what it means to you. Set boundaries (or people will simply exploit you) and accept the fact that you may lose them (that actually doesn't mean you will). The whole situation put your business at risk, and they are one of the problems. Ask them how can you pay your business rates when they don't pay the bills. Ask them to help you solve your problem. If they don't pay now, you need to stop any work you do for them. Put them on "credit stop" as MrOrange mentioned.

Situations like that are never simple. The joy of owning a business.
Good luck

[tight fart]

I'd get it if this was a larger company but a bank FFS.
Pay them a day late and you get a penalty.

[FiF]

Unfortunately some companies are bar stewards. No advice to OP but an anecdote of a difficult time where karma was dished out. No names.

We had one client who owed us literally close to a million pounds just on one contract. Dealt with all the offered reasons for non payment, this and that needed attention, correction here and there, most had proved to be complete balls, not all admittedly, but very minor. Nothing outstanding, hadd gone through all the reasonable measures, approaching both our year ends, relations were getting frosty as if they could delay it affected their accounts and clearly had no concern whatsoever of how it affected us being a much smaller outfit. It ended with our financial guy having the Christmas Eve from hell as he drove a 400 mile round trip to sit in their reception until he received the cheque. Which he did right at the close.

Next year they inflicted an out of the blue quality audit from hell on us, even their own auditors admitted, finally and with some embarrassment, that some of their observations were unrealistic and unfairly motivated. Other snidey moves too complicated to discuss here.

They were eventually binned as a client. Took them more than a year to come back as they had designed in some patented products not obtainable elsewhere. Oops. The day the commercial director told them once again to go swivel as they were not a business with which we wished to engage, well it was a good day to say the least. Took some balls to say it as it left a hole, but eventually filled with better business.

Later on they briefly hit national news due to a problem, best covered under the heading 'Don't do what we do, but do what we tell you'. Karma

[Chrisgr31]

With big companies the trick is to find out what their payment policy is and then issue invoices at the correct time. ie if they will pay at the end of the month following receipt dont issue invoices on the 1st, issue them on the 25th etc

[williaa68]

Thanks everyone for their thoughts and advice. Ive had a notification from the bank's "tradeshift" payment system overnight that the invoice is now "fully paid" which usually means that the money arrives in my account the next day. Just in time! I will leave more of a liquidity buffer in the future. Incidentally on Friday I set up an overdraft with TSB who were surprisingly easy to deal with and said the facility would be available today, in advance of the receipt of signed paperwork etc. They've been a bit st recently (outages last year etc) so I was pleasantly surprised to find them so accommodation this time.

[Phil Dicky]

williaa68 said:

Thanks everyone for their thoughts and advice. Ive had a notification from the bank's "tradeshift" payment system overnight that the invoice is now "fully paid" which usually means that the money arrives in my account the next day. Just in time! I will leave more of a liquidity buffer in the future. Incidentally on Friday I set up an overdraft with TSB who were surprisingly easy to deal with and said the facility would be available today, in advance of the receipt of signed paperwork etc. They've been a bit st recently (outages last year etc) so I was pleasantly surprised to find them so accommodation this time.

I dealt with local government for years a total pain when chasing money..60 days being the norm.in payment terms. Best course of action I found was to track down soneone higher up in accounts payable, someone who could actually get things done. After a few polite dealings with them and once on first name terms my invoices would be quickly paid.

[VEIGHT]

williaa68 said:

Thanks everyone for their thoughts and advice. Ive had a notification from the bank's "tradeshift" payment system overnight that the invoice is now "fully paid" which usually means that the money arrives in my account the next day. Just in time! I will leave more of a liquidity buffer in the future. Incidentally on Friday I set up an overdraft with TSB who were surprisingly easy to deal with and said the facility would be available today, in advance of the receipt of signed paperwork etc. They've been a bit st recently (outages last year etc) so I was pleasantly surprised to find them so accommodation this time.

Great to hear! One less thing to worry about moving into 2020!