Late payers deserve contempt not credit

[Power Lunch Club]

A brilliant article in today's Scotland on Sunday....Late payers deserve contempt not credit, by Michelle Rodger...

Michelle Rodger: Late payers deserve contempt not credit - Scotland on Sunday

It's true the longer people try to eek out payment the later it make the rest of paying our bills....which again only contributes to the slowing down of the economy.

So those that are holding back on payements (when they have the money) even on invoices under £100, should be viewed with utter contempt.

[polr]

That's a great article you linked to and I couldn't agree more, it's not nice getting tough but unfortunately sometimes your hands are tied - we've all got to eat!

[barryhynd]

I would also agree with the above statement but would add a little qualification to it.

If big businesses continue to pay the way they are in taking 90 - 120 days to pay suppliers then this will ultimately filter down the chain to smaller businesses. Fundamentally in any business you really should be looking to get your money in before you pay it out.

I completely appreciate that many businesses do take advantage and employ some pretty crappy tactics to avoid paying items that are due. I guess this is where effective credit control comes into play and you need to be keeping in touch with your customers.

[Former Member 1]

Originally Posted by polr

That's a great article you linked to and I couldn't agree more, it's not nice getting tough but unfortunately sometimes your hands are tied - we've all got to eat!

OK I confess! There was this chain of Chemists once.... Run by a certain Mr 'W'... On chasing his (quite legitimate) bill he told me, bluntly, to 'F'-Off and tried to play the 'hardman' ; 'Knowing' as he did that it wasn't worth my while taking him to court at the time...

Has to be said there's a certain amusement to be had from listening to a 'jorrie mooth' frae Milngavie try to 'give it' the tough guy act.... SO I filled four particularly large, thick, and disagreeable neighbours up with special brew and the promise of more if successful... And had them each dangle a litre of Nitromors over his prized classic Lancia....

Has to be said I'm not the prettiest bloke in the world myself; though like the earth itself (according to Douglas Adams) I am 'mostly harmless'....

Seemed to work though!

And it's worth noting that though this 'chain' survives it does so only in the South East of England...... I wasn't the only one he P'd off! and I believe he wound up having the business his Father set up run out of Scotland and the North East!

NOT that this is a collection technique I advocate or even particularly condone. But, as I'm sure I've posted here before, some of the most trustworthy credit control advice can be found in the old Irish folk song "The Wild Rover".....

" I asked her for credit and she answered me nay.....

...Saying 'custom like yours I can get any day' "


We have a fairly strict 20: 20: 60: stage payment policy. With clear T&C's saying that if people default then we apply full rack rates... which instantly costs them 15-20% on top of their original invoice... PLUS we pull the licence if they default. Which means that IF we find them using the material we bill them for a horrific figure and just let the whole thing get silly....

Frankly; I don't care who I P!$$ off! Doesn't matter!

Good honest people will always get as much slack as I can give them; we'll sort stuff out so long as the pot's kept boiling. Honourable people won't abuse that. The rest? You don't need!

If a customer's not paying they're not a customer! DUMP em and dump em hard!

[Adventurelife]

I think the very valid point in the article is about customers making up a large % of your business.

I really try not to let one sector never mind individual business be a large % of my revenue.

I made the mistake last year of letting the banking sector become a significant client base.

If you can keep your client base well spread it significantly reduces the impact when you do land a late payment issue as we all will at sometime.

I get a very broad view of who is paying and who is not by sector as our client base is very diverse.

In my experience

Worst paying sector = Large corporate businesses
Most improved sector = Government departments /schools etc
Sector that leaves me with bad debt most often = my own

[Former Member 1]

Originally Posted by Adventurelife

I really try not to let one sector never mind individual business be a large % of my revenue.

I've seen this bring friend's businesses down twice now....

First time was in '88 when my then business partner's PR and Publicity firm folded. He'd got into huge debt to service the print needs of a large Argyle-Based building firm who then started to stiff him for the money they owed him.... And as this was about 60% of his revenue base he could neither walk away nor carry it!

The second last year when another friend's PR agency (what is it with PR people) got 'stiffed' by a Welsh County Council! Again it was a fair chunk of his client base and they'd run up sizeable debts...

I agree absolutely that the large corporates are the worst! Which is one reason why I focus on the smaller businesses. Up to a decade or so ago over 80% of my business was for large corporates... and the payment problems were horrendous! This is why most video companies will take up to 60% upfront before they'll even unzip a camera bag! And why rack rates have so wide a margin built in....

[polr]

We've only had two bad paying clients (the rest are all lovely!) and each of them has been someone starting up a business after coming form a large corporate compay.

We had one who paid 85% of a completed/live project and when it came to paying the rest told us we had 'made too much profit and were just chasing the VAT element anyway'!!!

What in the world...!?

Apart from making no sense whatsoever, whether a profit is made is irrelevant when the cost has previously been agreed and they are happily using the completed product (still). Mind you, it did provide a great deal of hilarity in the office when that gem landed in our inboxes!

It's given me an idea though, next time I head into ASDA I'm going to eat a sandwich on the way round then offer them a % of the cost at the till as they must make a decent profit on sandwiches...Actually, no I won't, that would be immoral. ;-)

[stugster]

I had a client take 3 months to pay their invoice. They came back to me for another three computer desktops after that and I told him to sling his hook.

I need business, don't get me wrong, but I don't need customers like that. If you think it's okay to pay me for hardware/support 3 months after me doing the work/providing the product, you can go chase yourself!

[Former Member 1]

Originally Posted by polr

We had one who paid 85% of a completed/live project and when it came to paying the rest told us we had 'made too much profit and were just chasing the VAT element anyway'!!!

We don't pass licence for our videos over 'till the bill has been paid in full (it's written into out T&Cs). We only really start getting heavy when an account is 60 days overdue: If they don't pay we give them 28 days notice that we'll withdraw the temporary licence they get on delivery. We advise them that if they continue to use the video after that they're in breach of the CDPA and that continued use will constitute acceptance of the material at the default licence fee... Currently this is £35,000 per item per annum! They tend to cough up!

We also pull ALL the discounts and charge full rack rate on late accounts; and there's a specific part in our contract where the client acknowledges that the discounts are only applicable if the invoice is paid within 28 days of receipt...

[abs]

I've had clients pay within two days of sending them an invoice - fantastic, but I also have someone whose payment has been outstanding for seven months! It is a piddly little amount but he keeps giving me excuses including sob stories about his wife leaving him and freezing the bank account.

The thing is, I could have given him lots of referrals so he has actually lost out on much, much more in revenue than my invoice amount.

I meet him at FSB and Chamber of Commerce meetings and I only wish I had the hard neck to embarrass him in front of others at the meeting!

Theresia