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Started By
Message
what steps do you take when a customer with net terms is late on payments?
Posted on 6/18/14 at 11:22 am
Posted on 6/18/14 at 11:22 am
Still kind of new to this, I only have 27 customers that I have extended net terms to.
Generally under $200 is net 15, over $200 is net 30.
One guy owes me $164 another $93 both just hit day 15.
Problem is, these just happen to be the ONLY two customers that I made the trusting mistake on.
One is the brother of my fiances' boss, so she vouched for him. The other was a guy who through a friend was referred to me. He owns multiple units down here so I wanted to retain his properties.
I snail mailed him twice and called once and left a message. I haven't really harassed or anything, because it's just now late. I'm thinking about mailing a certified letter with an invoice in four to five days.
I have phone and personal verification on both jobs, and both invoices were signed by persons authorized by the property owner (tenants).
The prices were given and okayed before the repairs were done.
I generally do everything COD, but I thought offering net terms would help out Property managers and landlords who need appliance services but can't fit it in their schedule to meet someone and pay them that day.
Just curious on what steps to take if they don't pay?
Go to their house? In Louisiana it's actually illegal to knowingly cause an item to be in a state of disrepair. (you can't take take parts out/break something you fixed)
I'm just curious.
Generally under $200 is net 15, over $200 is net 30.
One guy owes me $164 another $93 both just hit day 15.
Problem is, these just happen to be the ONLY two customers that I made the trusting mistake on.
One is the brother of my fiances' boss, so she vouched for him. The other was a guy who through a friend was referred to me. He owns multiple units down here so I wanted to retain his properties.
I snail mailed him twice and called once and left a message. I haven't really harassed or anything, because it's just now late. I'm thinking about mailing a certified letter with an invoice in four to five days.
I have phone and personal verification on both jobs, and both invoices were signed by persons authorized by the property owner (tenants).
The prices were given and okayed before the repairs were done.
I generally do everything COD, but I thought offering net terms would help out Property managers and landlords who need appliance services but can't fit it in their schedule to meet someone and pay them that day.
Just curious on what steps to take if they don't pay?
Go to their house? In Louisiana it's actually illegal to knowingly cause an item to be in a state of disrepair. (you can't take take parts out/break something you fixed)
I'm just curious.
8
Posted on 6/18/14 at 11:39 am to Napoleon
My experience is that a lot of small business owners just don't believe in paying on time. For some of them it is a cash flow issue, but for many, I really think it is just some sort of weird power grab, they think that by paying the bill when they want to, they have some sort of power over the vendor.
You said they just hit the 15th day, but, you've already mailed him twice and called once?
You might be annoying him which is another reason for him to pay the late play game (not saying it is right, just saying it happens).
If you offer someone net 15, and they have been presented the invoice, don't follow up until after the 15th day. Also understand that some people interpret net 15 as being postmarked on th 15th day after the day they recieve the invoice., So, after 3-4 days past the due date, I'd follow up with a call and a statement.
Have you considered a payment discount / late interest scheme? Pretty common is 2-10/net 30, meaning, a 2 percent discount if they pay in 10 days. At those price levels, you may or may not get people to take advantage of it (On a $200 bill, customer would save $4). You also tack on interest on late payments, usually 18 percent per annum.
The line of work I am in is basically all net 30, and I can tell you that collections might be the most unfun part of the job!
You said they just hit the 15th day, but, you've already mailed him twice and called once?
You might be annoying him which is another reason for him to pay the late play game (not saying it is right, just saying it happens).
If you offer someone net 15, and they have been presented the invoice, don't follow up until after the 15th day. Also understand that some people interpret net 15 as being postmarked on th 15th day after the day they recieve the invoice., So, after 3-4 days past the due date, I'd follow up with a call and a statement.
Have you considered a payment discount / late interest scheme? Pretty common is 2-10/net 30, meaning, a 2 percent discount if they pay in 10 days. At those price levels, you may or may not get people to take advantage of it (On a $200 bill, customer would save $4). You also tack on interest on late payments, usually 18 percent per annum.
The line of work I am in is basically all net 30, and I can tell you that collections might be the most unfun part of the job!
This post was edited on 6/18/14 at 11:41 am
Posted on 6/18/14 at 11:46 am to LSUFanHouston
quote:
My experience is that a lot of small business owners just don't believe in paying on time. For some of them it is a cash flow issue, but for many, I really think it is just some sort of weird power grab, they think that by paying the bill when they want to, they have some sort of power over the vendor.
ain't dat the truth!!
I have plenty of customers that we have to chase every month.
Most of these customers are well established and have PLENTY of cash flow.
quote:
2 percent discount if they pay in 10 days
quote:
You also tack on interest on late payments
quote:
I can tell you that collections might be the most unfun part of the job!
Yep, I tell people I'm more in the collections business than anything...
Posted on 6/18/14 at 11:48 am to Napoleon
quote:
Still kind of new to this
That's the line of this that you need to focus on. Be patient. Most people are decent. Especially ones that come through a referral process.
I had a weird one recently. Guy ran up a $1500 bill and did not pay. I suspended services and just wrote it off. Guy emails me 15 months later and says, do I owe you money?
Sent him the invoice and three months later got a check for payment in full.
Sometimes it really is cash flow, sometimes its power, and sometimes its weird.
Posted on 6/18/14 at 11:51 am to LSUFanHouston
quote:
You said they just hit the 15th day, but, you've already mailed him twice and called once?
I called when I was mailing the invoice just to tell him what the final amount was with taxes and all. I do that with many customers. As we grow I'll stop. It's mainly just to explain how the job went and not really to collect payment.
I sent an invoice out the day after the job, and a second invoice out on Monday. I did two for each, because both said. "The fifteen days doesn't matter, I'll send the check as soon as the invoice gets to my PO box. (ironically on same wall as my PO box. lol)
One guy I didn't call yet, the other I called once the day after the repair. I don't want to harass them.
Not yet at least.
But usually I get an email or a call from a customer to talk about the repair. Unless its my really big out of state customers, but those I charge CC on the 15th day, so easy.
These two are the only two with out a check or cc on file.
Posted on 6/18/14 at 11:51 am to Napoleon
I wouldn't pay my $160 bill if within 15 days I had received another letter and 2 phone calls.
Posted on 6/18/14 at 12:31 pm to Napoleon
No company I know pays in 15 days, hell due upon receipt usually takes longer than that with snail mail
Posted on 6/18/14 at 12:40 pm to Golfer
quote:
I wouldn't pay my $160 bill if within 15 days I had received another letter and 2 phone calls.
So Golfer.
If you tell a guy on the phone "Oh that price is excellent. I'm not worried about the time-frame, just get me the invoice and I'll cut out a check right away" Then don't answer the post repair call or call back to check on repair status. Then don't respond to the first invoice and so after 13 days you get a second reminding you. Because you got a second invoice (no DUE NOW, no past due, just an exact copy of the first invoice) you wouldn't pay?
Honestly I'm new at this billing stuff. I used to be 100% COD.
I'll send past due letters to both accounts in seven days.
I guess being a little late is normal. Just every single other customer even the slumlord I don't deal with anymore usually pays right after getting the invoice.
Which is another thing, these two are the ONLY snailmailed invoices, the only two I don't have emails for.
I was just curious on what to expect if they don't pay.
But it looks like as business owners we just eat it?
Posted on 6/18/14 at 12:41 pm to yellowfin
quote:
No company I know pays in 15 days, hell due upon receipt usually takes longer than that with snail mail
Common in Appliance repair.
A letter mailed from NOLA to BR should arrive the next day or day after at latest.
One of these guys PO box is on the same wall as mine.
I'm 30 days on bigger jobs. Most of yall are thinking big tickets.
Posted on 6/18/14 at 12:45 pm to Napoleon
We've got about a dozen customers in Latin America that will not pay if the invoice isn't in their exact format. They'd just reject and hope it buys them another month.
They are jerks too....we have a new system for them now. We have someone call them and correct the inevitable bullshite detail they complain about (usually the day of their due date) and post the invoice instantly along with a copy of a "stop shipment pending payment" order. It took a while, but I think the higher ups are tired of their bullshite.
These aren't mom and pops.....these are big arse companies. It's a trend we notice in one part of the world.
In all honesty, my company tries to pay their bills on time. They watch them very carefully- especially with our major vendors like the American rail carriers.
They are jerks too....we have a new system for them now. We have someone call them and correct the inevitable bullshite detail they complain about (usually the day of their due date) and post the invoice instantly along with a copy of a "stop shipment pending payment" order. It took a while, but I think the higher ups are tired of their bullshite.
These aren't mom and pops.....these are big arse companies. It's a trend we notice in one part of the world.
In all honesty, my company tries to pay their bills on time. They watch them very carefully- especially with our major vendors like the American rail carriers.
This post was edited on 6/18/14 at 12:52 pm
Posted on 6/18/14 at 12:48 pm to Napoleon
The company I work for has lots of money, yet we always have trouble paying our bills. This is all because the person that is supposed to pay our bills is lazy, totally unorganized and always has an excuse.
Posted on 6/18/14 at 12:55 pm to dewster
I pay all my vendors early but I budget well.
I am very very small.
I get most of my parts on 15-30 credit. I just hate having to pay my bills before I was paid.
But like I said, new and am learning.
I am very very small.
I get most of my parts on 15-30 credit. I just hate having to pay my bills before I was paid.
But like I said, new and am learning.
Posted on 6/18/14 at 2:22 pm to Napoleon
quote:
If you tell a guy on the phone "Oh that price is excellent. I'm not worried about the time-frame, just get me the invoice and I'll cut out a check right away" Then don't answer the post repair call or call back to check on repair status. Then don't respond to the first invoice and so after 13 days you get a second reminding you. Because you got a second invoice (no DUE NOW, no past due, just an exact copy of the first invoice) you wouldn't pay?
I guess what I'm saying is I would pay it but it just went to the end of my to do list.
When I get a bill for something, I expect I have 30 days to pay and 45 before it becomes past due. If after 15 days I've received two requests for the money and a phone call, I'm going to make you sweat it out.
You have to understand not every company has someone on staff writing checks each day. They may send these off to their CPA who handles this for them, and that CPA may be out of the office for a week and the business owner may not have a chance to get by their PO Box.
Posted on 6/18/14 at 3:09 pm to Napoleon
Proper cash-flow is essential to a small business. I managed a factoring business prior to owning my own business, so I interpret terms to be terms -- no leeway allowed.
I told several customers who didn't pay on time to trade elsewhere. It's been almost 10 years since I was collecting for my business, and from what I see now, late payment is becoming the standard.
The solution is to require immediate payment, if you can get away with it..
I told several customers who didn't pay on time to trade elsewhere. It's been almost 10 years since I was collecting for my business, and from what I see now, late payment is becoming the standard.
The solution is to require immediate payment, if you can get away with it..
Posted on 6/18/14 at 3:32 pm to Napoleon
quote:
I am very very small.
I get most of my parts on 15-30 credit. I just hate having to pay my bills before I was paid.
But like I said, new and am learning.
so you are in the appliance repair business?
Posted on 6/18/14 at 5:10 pm to Golfer
quote:
You have to understand not every company has someone on staff writing checks each day. T
I'm billing people not companies.
I'm billing a guy who owns a few four plexes, I doubt either are busier than me to be honest.
Posted on 6/18/14 at 5:13 pm to Double Oh
quote:
so you are in the appliance repair business?
yes.
Appliance repair business and answering questions via email business too (every time I post my email on the OT I get flooded with emails from users asking questions. Spent three hours answering them the other day.
Posted on 6/18/14 at 5:21 pm to Golfer
Karma just happened.
His tenant just called me because the dryer went out. (I didn't touch the dryer yet)
Wants me to come tomorrow.
I told the tenant he needs to work out payment with the landlord before I can do the work.
So hopefully that at least gets some fire lit under his arse.
But yes, due on receipt is what I normally do, my big customers do have 30 days. Anything over $200 you get 30 days. Under $200 you have 15 days.
His tenant just called me because the dryer went out. (I didn't touch the dryer yet)
Wants me to come tomorrow.
I told the tenant he needs to work out payment with the landlord before I can do the work.
So hopefully that at least gets some fire lit under his arse.
But yes, due on receipt is what I normally do, my big customers do have 30 days. Anything over $200 you get 30 days. Under $200 you have 15 days.
Posted on 6/18/14 at 5:40 pm to Napoleon
Edit: just saw you were billing individuals and not businesses
This post was edited on 6/18/14 at 5:43 pm
Posted on 6/18/14 at 5:46 pm to Napoleon
quote:
rma just happened.
His tenant just called me because the dryer went out. (I didn't touch the dryer yet)
Wants me to come tomorrow.
I told the tenant he needs to work out payment with the landlord before I can do the work.
So hopefully that at least gets some fire lit under his arse.
But yes, due on receipt is what I normally do, my big customers do have 30 days. Anything over $200 you get 30 days. Under $200 you have 15 days.
i would give them Net 30 and on the 31st day i would be calling there cell phone/house phone every 15 mins
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