Your thoughts on speeding up payouts???

[Kays Supply]

You guys have pretty much said what I know, but hate to have to get to. I have been dealing with most of my customers for 10 to 20 years. The slowest pay is also my biggest customer. When you tell 60% of you work to hit the road, you feel it, big time. The sad thing is he has enough money to " burn a wet mule" , he just doesn't sweat the small stuff, my invoices. I'm trying to fool him into paying rather than have a stand off. He can also afford fancier lawyers than I can.

 

[Kernopelli]

I think everyone understands where you are at. The reality is you aren't telling him to hit the road. I don't care how much or little money he has, he has been in your shoes in some way or fashion. He obviously knows you well, knows you do great work and are more than fair and reasonable. He isn't going to leave you because you need to be paid a little more promptly, especially if he has the money. My attorney (Mike Twomey in C'dale--great guy) told me something years ago when I was trying to figure out how to approach my life long best friend about disolving our parnership and he was absolutely right. He said to sit down and have a face to face meeting and tell the person "what's going on" in a very easy manner and it needs to be discussed. I have done this many times since and found that 99% of problems can be worked out a lot more amiably than you ever imagined this way.

I have never heard a bad word about you or your business. All of these guys know you well and aren't going to walk away because you ask for something that is really very reasonable. I think your main "problem", especially, needs a personal meeting where you can tell him how much you appreciate him but "___________"( fill in the blank) is what you need from him.

The truth is, this guy doesn't "forget" that you need paid, he has become accustomed to holding on to his money as long as his conscious allows. We have the same problems, you extend things for people a couple of times and from then on they start to "believe" that this is how you "prefer" (haha!) to do business or you're the one with deep pockets and the business they throw you is your "little stuff" that you don't sweat. My wife works with doctor's real estate contracts everyday and they are the worst.....same person that gives her the most grief might even be your main problem, I don't know. The point is, these "problems" didn't get where they are by being stupid, they understand money issues better than anyone. Even the biggest ego's will listen to reason when approached in the right manner. This issue is obviously weighing heavily on you and I know... believe me I know, how hard it can be to address someone directly about these things. The worst case scenario is to ask him up front "Am I going to lose your business if I ask this of you"? If the answer is yes, then you just have to live with the late payment. But I promise you that if he isn't having major cash flow problems he will tell you he can be more prompt and will respect you for it. For any new customers, start out with the payment schedule options mentioned before.

These things are a major P.I.T.A. but you know it is an almost inevitable issue of being in business.

 

[Egon]

Unfortunately I've never been on the "Waiting to be Paid" list.

But when my creditors send around the big fellow with a baseball bat I always know it's time to "Pay"

 

[yellowdogsvc]

You need to have a clear policy that you are willing to enforce.
A customer that doesn't pay is not a good customer.

We agreed to a price, I'm willing to bill it because not everyone writes checks everyday (heck,I've never even met some of my customers, I just send them a bill and a check shows up) but I do expect to be paid and paid on time.

If you can't pay on time, it should cost you money. I'm being a bank, banks charge interest, so do I.

After 3 weeks, you get a friendly reminder call (people do lose the bills, they get lost in the mail, whatever, stuff happens)
After 1 month, you get a "you're late, you now owe X + X%"
After 6 weeks, you get a not so friendly reminder call.
After 2 months you get another letter with X+2X% now due and the bill is not satisfied unless the late fee is paid and in 2 weeks they will hear from my lawyer.
After 75 days, you get a call from my lawyer and now you owe lawyer's fees on top of it
At 90 days, the next step is to lien the property (which is yet more lawyer's fees).

You have to be hard nosed about this. The squeaky wheel gets paid, the silent one gets ignored. You wouldn't work for free would you? Of course not, so why are you?

it's by far the worst part of the job. I've never gotten to the lawyer part, but it's all set up to happen. It takes a lot of work and frustration to get paid from some people, the interest pays for that time that I had to spend to call/write/cajole you to pay your bills.

Oh, and people who pay late all the time, they don't get the best pricing. it's only fair. And anyone over 30 days doesn't get anymore work done (obviously).

I love this. Can I borrow it? I have always been too timid about getting paid. As a sole operator, and because of rain days and break down days, I can't afford to be a bank either. I have bills do on the 1st and 15th and quarterly taxes. I do not want to have to borrow to pay those bills! Your method seems the least offensive and easy to understand policy.

 

[yellowdogsvc]

You guys have pretty much said what I know, but hate to have to get to. I have been dealing with most of my customers for 10 to 20 years. The slowest pay is also my biggest customer. When you tell 60% of you work to hit the road, you feel it, big time. The sad thing is he has enough money to " burn a wet mule" , he just doesn't sweat the small stuff, my invoices. I'm trying to fool him into paying rather than have a stand off. He can also afford fancier lawyers than I can.

An honest note with a bit of whine to it might appeal to his since or urgency for the little guy.

 

[Kays Supply]

Yellowdogsvc, Your idea has worked in the past. I just got a payout Sat. Can put meat in the bean pot this week.

 

[Bird]

I see some say incentives don't work, and that is something that amazed me many years ago. My dad had an auto parts store and of course our primary business was the car dealers and other mechanics in town, nearly all of which bought on credit and we billed them each month. The warehouse that supplied most of our parts billed us monthly and gave a 2% discount for payment within 30 days, which we always did to save that money. And yet, we got many letters of thanks, and were told that many other parts store owners never took advantage of that savings. But, since we got that 2% discount, we offered the same to all of our customers, and sure enough, very few of them took advantage of it.

 

[Kays Supply]

That is part of my problem. I always pay in time to get the 2% from my wholesaler. My customers aren't as quick. If I try the 2% on them and they don't go for it, I won't be any worse off I guess.

 

[Bird]

I'll tell you something that's even worse. Our city used to require bids to include the 2% discount for payment within 30 days. They stayed about 5 months behind on paying the bills, but still deducted the 2% when they sent the check. Of course that was over 30 years ago, so I can't say what they do now.

 

[conner33]

Late Fees = Bad

Incentives to pay early = Good

We always offered a 10% discount ($500 max) if NET paid in 15 days and 5% discount ($500 max) if paid within 30 days. Anything after that is full price and more then 2 months unpaid gets a collection notice sent.

I like Dmace's strategy here, Late fees never work.