Slow payers

[Four Cofffee]

I have one client (local authority) who drives me mad with invoicing. No matter how many times we make sure we get a purchase order, send copies to the contact and to finance not only don't they pay on time but every time we chase they ask for yet another copy of the invoice by email which is a pain to keep printing onto headed paper and scanning. I reckon it takes 3 or 4 chases to get paid and at each chase we end up spending time emailing, sending copies, getting new purchase orders (one of their favourite excuses is that the purchase order wasn't for enough money and has had to be reissued, so can they have a new invoice. Every time we moan about payments they make another suggestion about speeding things up (new route for invoices, new way of handling purchases orders etc). None of them work.

I would ask for payment upfront but their work is often time limited and needs doing urgently. I have thought about adding 10% which they deduct for paying on time but I suspect that might damage the relationship with the contact who send s the work to us, as that would put pessure on her budgets when the problem is in finance. I even wrote to the finance director and was assured it was a 'new system' issue but things have got worse not better.

Any ideas?

[Don]

Yes.

If they are a large organisation they will be staffed by monkeys who do not give a st. Do not think that this is personal in any way. They will be being this crap at paying everyone.

In these times they can do what they fking well want because if you put your prices up to compensate they will just give the business to someone else.

Much as I hate the injustice of it there is nothing you can do. Private sector clients can usually be persuaded to pay quickly if you can carefully position them over a barrel. With public sector clients even the barrel doesn't work. Instead you have to persuade them to outsource their payment systems to you so you can do it for them so they can sit on their arses doing less than nothing all day.

[oilandwater]

I have the same problem EVERY quarter. Big company, slow payers. Even though the payment to me is on computer set up for automatic payment, I still have to email them to 'remind' them they have to pay me.
Every quarter they are late. I even shifted the penalty time from three weeks to two, still late.
B*****ds.

[threesixty]

Four Cofffee said:

I have one client (local authority) who drives me mad with invoicing. No matter how many times we make sure we get a purchase order, send copies to the contact and to finance not only don't they pay on time but every time we chase they ask for yet another copy of the invoice by email which is a pain to keep printing onto headed paper and scanning. I reckon it takes 3 or 4 chases to get paid and at each chase we end up spending time emailing, sending copies, getting new purchase orders (one of their favourite excuses is that the purchase order wasn't for enough money and has had to be reissued, so can they have a new invoice. Every time we moan about payments they make another suggestion about speeding things up (new route for invoices, new way of handling purchases orders etc). None of them work.

Any ideas?

Im supprised at this, we deal with just about every local authority in the country, currently we're forward invoicing most of them because they want to pay us before their year end.

What sector is your business in?

[Four Cofffee]

threesixty said:

Four Cofffee said:

I have one client (local authority) who drives me mad with invoicing. No matter how many times we make sure we get a purchase order, send copies to the contact and to finance not only don't they pay on time but every time we chase they ask for yet another copy of the invoice by email which is a pain to keep printing onto headed paper and scanning. I reckon it takes 3 or 4 chases to get paid and at each chase we end up spending time emailing, sending copies, getting new purchase orders (one of their favourite excuses is that the purchase order wasn't for enough money and has had to be reissued, so can they have a new invoice. Every time we moan about payments they make another suggestion about speeding things up (new route for invoices, new way of handling purchases orders etc). None of them work.

Any ideas?

Im supprised at this, we deal with just about every local authority in the country, currently we're forward invoicing most of them because they want to pay us before their year end.

What sector is your business in?

We are a consultancy delivering assessment and training services. We have another similar public sector clients who have a 10 day payment target. This particular one owes us from December and their record for making a payment is 8 months which is why we chae them because their system is able to lose invoices at will. This is the fourth time I have sent that December invoice.

[Simpo Two]

I wonder what they do with all the original invoices? Somebody needs a good kick up the arse.

[JustinP1]

Four Cofffee said:

I have thought about adding 10% which they deduct for paying on time but I suspect that might damage the relationship with the contact who send s the work to us, as that would put pessure on her budgets when the problem is in finance...
Any ideas?

About 90% of our money comes from the public sector, local authorities.

As a matter of course, invoices seem to be date stamped - regardless of the date on them - to be paid 30 days after receipt.

Of course, should their be some kind of 'problem' with the invoice, this only comes to light after 30 days. "Your company is not on our system... etc."

If you are careful how you word it, the decision maker who hold the budget can be on your side. "10% penalty for late payment" sounds bad, however:

"Prompt payment and reducing administration costs of invoices means that we are able to offer two rates to our clients, £850 for payment received within 28 days, or if you need a longer period of credit, we allow up to 60 days as standard at £950."

Then the buyer has a choice. In their head they know they can pay in 28 days and will blank out the rest and trust 'finance' to do it's job. As a backup, to prevent misunderstanding, an email, fax or letter CCed to both the finance and the buyer warning them that you have not received payment, and they have 7 days left will work. Either one will care enough not to be left with the blame in losing their company the money to take action.

Doing that, we have gone from something like 50% compliance to over 95%. Of course in the 5%, the cost covers any hassle in making new invoices.

[Jasper Gilder]

I also deliver training to Local Authorities. Worth pointing out to them that government guidelines require invoices are paid in 30 days. That usually does the trick

[Cyberprog]

Just invoice them for the statutory late payment charge (£40 in most cases, per invoice) plus 8% interest over base.


See http://www.paylate.co.uk

said:

What are the statutory penalties?

* A fixed charge of £40, £70 or £100 depending on the size of the debt (under £1,000, under £10,000, and higher).
* Interest at 8% over base rate (a level set each 6 months for simplicity).

Which law?

Late Payment of Commercial Debts (Interest) Act 1998

* Interest at 8% over base rate
* 1st Nov 1998 for small suppliers to large customers
* 1st Nov 2000 for small suppliers to small customers

Late Payment of Commercial Debts Regulations 2002 (SI 2002 No 1674)

* Additional fixed penalty charge £40, £70 or £100 as well as the 8% over base rate of interest
* 7th Aug 2002 applicable to all commercial contracts

Note that these apply to contracts formed after the dates specified.

Edited by Cyberprog on Tuesday 23 March 20:56

[davidjpowell]

Cyberprog said:

Just invoice them for the statutory late payment charge (£40 in most cases, per invoice) plus 8% interest over base.


See http://www.paylate.co.uk

said:

What are the statutory penalties?

* A fixed charge of £40, £70 or £100 depending on the size of the debt (under £1,000, under £10,000, and higher).
* Interest at 8% over base rate (a level set each 6 months for simplicity).

Which law?

Late Payment of Commercial Debts (Interest) Act 1998

* Interest at 8% over base rate
* 1st Nov 1998 for small suppliers to large customers
* 1st Nov 2000 for small suppliers to small customers

Late Payment of Commercial Debts Regulations 2002 (SI 2002 No 1674)

* Additional fixed penalty charge £40, £70 or £100 as well as the 8% over base rate of interest
* 7th Aug 2002 applicable to all commercial contracts

Note that these apply to contracts formed after the dates specified.

Edited by Cyberprog on Tuesday 23 March 20:56

Great advice, and watch the repeat business flow... I guess slightly better chance that a local authority would not be as offended, but not sure I would want to try this.

[robm3]

I did some work for a large premium German Automobile company that actually delayed payments on purpose using any excuse they could and when the supplier got anxious they'd offer to pay within 7days but less some percentage points to cover admin and the like.
Eye opening stuff!!

[JustinP1]

davidjpowell said:

Cyberprog said:

Just invoice them for the statutory late payment charge (£40 in most cases, per invoice) plus 8% interest over base.


See http://www.paylate.co.uk

said:

What are the statutory penalties?

* A fixed charge of £40, £70 or £100 depending on the size of the debt (under £1,000, under £10,000, and higher).
* Interest at 8% over base rate (a level set each 6 months for simplicity).

Which law?

Late Payment of Commercial Debts (Interest) Act 1998

* Interest at 8% over base rate
* 1st Nov 1998 for small suppliers to large customers
* 1st Nov 2000 for small suppliers to small customers

Late Payment of Commercial Debts Regulations 2002 (SI 2002 No 1674)

* Additional fixed penalty charge £40, £70 or £100 as well as the 8% over base rate of interest
* 7th Aug 2002 applicable to all commercial contracts

Note that these apply to contracts formed after the dates specified.

Edited by Cyberprog on Tuesday 23 March 20:56

Great advice, and watch the repeat business flow... I guess slightly better chance that a local authority would not be as offended, but not sure I would want to try this.

Indeed.

I've only used that twice out of 1000 invoices. It works much better as a warning stick than an automatic moneyspinner IMHO.

[Cyberprog]

davidjpowell said:

Cyberprog said:

Just invoice them for the statutory late payment charge (£40 in most cases, per invoice) plus 8% interest over base.


See http://www.paylate.co.uk

said:

What are the statutory penalties?

* A fixed charge of £40, £70 or £100 depending on the size of the debt (under £1,000, under £10,000, and higher).
* Interest at 8% over base rate (a level set each 6 months for simplicity).

Which law?

Late Payment of Commercial Debts (Interest) Act 1998

* Interest at 8% over base rate
* 1st Nov 1998 for small suppliers to large customers
* 1st Nov 2000 for small suppliers to small customers

Late Payment of Commercial Debts Regulations 2002 (SI 2002 No 1674)

* Additional fixed penalty charge £40, £70 or £100 as well as the 8% over base rate of interest
* 7th Aug 2002 applicable to all commercial contracts

Note that these apply to contracts formed after the dates specified.

Edited by Cyberprog on Tuesday 23 March 20:56

Great advice, and watch the repeat business flow... I guess slightly better chance that a local authority would not be as offended, but not sure I would want to try this.

The general advice is you credit the first one to show them that you're not being unreasonable, and that they've been taking the pi$$. If they still pay late - do you really want to work for them? I've reached this point with one company, who have indeed sent me an email saying that they don't have the money and are waiting for payments in. This is for a Invoice from November for £30 and another Invoice for £150. Both are getting £40 late payments + interest if they don't cough by the end of the month, and I've had it with that particular company. As much as the work is good and fun, getting stitched on the payment side of things isn't worth it.

[Four Cofffee]

Cyberprog said:

davidjpowell said:

Cyberprog said:

Just invoice them for the statutory late payment charge (£40 in most cases, per invoice) plus 8% interest over base.


See http://www.paylate.co.uk

said:

What are the statutory penalties?

* A fixed charge of £40, £70 or £100 depending on the size of the debt (under £1,000, under £10,000, and higher).
* Interest at 8% over base rate (a level set each 6 months for simplicity).

Which law?

Late Payment of Commercial Debts (Interest) Act 1998

* Interest at 8% over base rate
* 1st Nov 1998 for small suppliers to large customers
* 1st Nov 2000 for small suppliers to small customers

Late Payment of Commercial Debts Regulations 2002 (SI 2002 No 1674)

* Additional fixed penalty charge £40, £70 or £100 as well as the 8% over base rate of interest
* 7th Aug 2002 applicable to all commercial contracts

Note that these apply to contracts formed after the dates specified.

Edited by Cyberprog on Tuesday 23 March 20:56

Great advice, and watch the repeat business flow... I guess slightly better chance that a local authority would not be as offended, but not sure I would want to try this.

The general advice is you credit the first one to show them that you're not being unreasonable, and that they've been taking the pi$$. If they still pay late - do you really want to work for them? I've reached this point with one company, who have indeed sent me an email saying that they don't have the money and are waiting for payments in. This is for a Invoice from November for £30 and another Invoice for £150. Both are getting £40 late payments + interest if they don't cough by the end of the month, and I've had it with that particular company. As much as the work is good and fun, getting stitched on the payment side of things isn't worth it.

I suppose the flip side is that they are so disorganised that often they have to use our 'express' service which carried a 75% premium, so yes we do want them as a customer.

I like the idea of the 'discount for early payment' but I think I would want to agre that with the person commissioning the work and reassure her that it was just a carrot for her finance dept and that we would credit that extra chrage initially, as she does her best to get payment on time (except for losing invoices).

On the 'lost invoice' excuse we have tried everything. We insert it to a plastic wallet so it can't get mixed up with the papers accompanying it, tell them in a cover leter that the invoice is enclosed, send it Special Delivery and even confirm receipt.

[bogwoppit]

Emailing invoices should be easy: can you not generate PDF invoices from the same system that generates them for printing? The online system I use can generate invoices, mail or email them, send reminders, include discounts for early payment, etc. Obviously it can't change the behaviour of bad payers, but it can at least reduce admin costs in chasing them.

[Four Cofffee]

bogwoppit said:

Emailing invoices should be easy: can you not generate PDF invoices from the same system that generates them for printing? The online system I use can generate invoices, mail or email them, send reminders, include discounts for early payment, etc. Obviously it can't change the behaviour of bad payers, but it can at least reduce admin costs in chasing them.

I think it is worth scanning their invoices and attaching them to the email which goes with the product. Then at least I can repeat that easily when they lose them. Good idea , thanks.

[Cyberprog]

Four Cofffee said:

On the 'lost invoice' excuse we have tried everything. We insert it to a plastic wallet so it can't get mixed up with the papers accompanying it, tell them in a cover leter that the invoice is enclosed, send it Special Delivery and even confirm receipt.

Hand deliver sealed in a plastic enclosure with a handcuff on chain attached, and attach it to the head finance troll?
Maybe too far?

[ClassicMercs]

Most of my own slow payment experience is not with local authorities - although large corporations can be a law unto themselves. We have had some slight issues with major international charities of late, but excused them as their staff had all been allocated to purchasing for the Haiti disaster and nobody was left to pay the bills, at least for a few weeks.
Our problem is the small boys - fishermen and chicken farmers - we have a diverse business. On Friday I plan to attend a local farmers market on the way to work to seek out a chicken farmer who I understand attends regularly - although he is based 50 miles away (Search engines are great !). And in a couple of weeks I will turn up at a customers premises over 400 miles away - whilst on holiday in the area (Speyside). Both owe £250.
Do people feel this is ethical ? Some staff are not sure. But if you have had the goods you should pay up (and not get credit again). We are talking very slow (9 months) - but my boss is too soft.

[Four Cofffee]

ClassicMercs said:

Most of my own slow payment experience is not with local authorities - although large corporations can be a law unto themselves. We have had some slight issues with major international charities of late, but excused them as their staff had all been allocated to purchasing for the Haiti disaster and nobody was left to pay the bills, at least for a few weeks.
Our problem is the small boys - fishermen and chicken farmers - we have a diverse business. On Friday I plan to attend a local farmers market on the way to work to seek out a chicken farmer who I understand attends regularly - although he is based 50 miles away (Search engines are great !). And in a couple of weeks I will turn up at a customers premises over 400 miles away - whilst on holiday in the area (Speyside). Both owe £250.
Do people feel this is ethical ? Some staff are not sure. But if you have had the goods you should pay up (and not get credit again). We are talking very slow (9 months) - but my boss is too soft.

I am sure if their wages were 9 months late they would complain? I have tried to get this across to some of the local authority people that as a small business that £1500 they owe us is a chunk of our wage for that month. If they had that % of their wages withheld because the finance dept couldn't get their act together I am sure they would not be happy.

[JustinP1]

ClassicMercs said:

Most of my own slow payment experience is not with local authorities - although large corporations can be a law unto themselves. We have had some slight issues with major international charities of late, but excused them as their staff had all been allocated to purchasing for the Haiti disaster and nobody was left to pay the bills, at least for a few weeks.
Our problem is the small boys - fishermen and chicken farmers - we have a diverse business. On Friday I plan to attend a local farmers market on the way to work to seek out a chicken farmer who I understand attends regularly - although he is based 50 miles away (Search engines are great !). And in a couple of weeks I will turn up at a customers premises over 400 miles away - whilst on holiday in the area (Speyside). Both owe £250.
Do people feel this is ethical ? Some staff are not sure. But if you have had the goods you should pay up (and not get credit again). We are talking very slow (9 months) - but my boss is too soft.

All you need is a set of standard letters:

1) You payment is overdue, is there a problem? Here's a faxback sheet telling us when and how you intend to pay us.

2) Your payment is now a month overdue, in seven days we will invoke the statutory charges of £40/£70 and backdate interest from a month ago. Please pay us so we can avoid this.

3) You've not paid us, here's the charges. This is serious now, the next letter we will write in seven days will be a final warning of legal action.

4) Final Warning of Intended Legal Action. 7 days to pay or get court papers.


For the cost if 4 stamps you'll get 99% of payments.