120 day payment terms, corporate bullying?

[rcx132]

I've worked with this client for many years when they were still small, as they got bigger their payment terms got worse and worse. They use some unfair tactics but the one I discovered today has really annoyed me....

When they finally pay you, they send "remittance advice" saying payment has been made. So you feel like you've been paid. In reality it takes the payment a week to reach the account. Today I drilled them on why that is as almost all bank payments are instant these days, the accounts lady finally admitted that they post date the payments.

So getting paid by this corporate bully is something like this:

1. 90 day payment terms.
2. Half of invoices don't get "paid" within the 90 days until you chase them.
3. Any problems with any invoices, e.g. one digit out in the details, invoice gets rejected. They don't tell you it's been rejected. You find out after it's not been paid on time.
4. Once the 90 days is reached they then tell you that the next "payment run" is next week.
5. Once the payment run is done, they send you remittance advice but the payment is post dated by another week.

Lovely.

 

[Parm]

It seems to be the way of the world these days

Your 100% correct, corporate bully's

 

[cumbriasteve]

I assume their business is too important to you to put a 10% charge on any late payments beyond the 90 days.

Can they find another firm easily that will do what you provide for the same price and to the same standard, that's the clincher.

 

[rtbcomp]

^^ I had that situation, ended up with the MD asking me to go round to his house at 19:00hrs to collect a cheque. No sign of him at 20:00. Went round next day (Saturday) in "Pay up NOW!" mood, got my cheque and left with "Don't call me again".

I knew full well he could pay because I did their day to day accounts when they were too busy.

 

[8ob]

Used the banks factoring service for a few years and built the cost into the customers invoice, there are plenty of deals offered so worth speaking to one of the team. We used to get this 120 day malarkey then chase them to be told they never recieved/lost the invoice and then start all over again. Banks offer a factoring service for a very small fee and will forward you 80% ( negotiable) of the invoice value immediately, they send you the remaining 20% when they receive payment from your client. The clients quake in their boots when you start using this because its the banks that do the chasing and the last thing any business needs is to jerk the banks off. It put manners on the lot of them to the point we dont need to factor any more

Bob

 

[GW8IZR]

I've been on the other side of the table and to be honest it was because 'we could', it was beneficial to us - I'm not defending that position at all and if I'd been on the other side of the table I'd have been similarly annoyed.

On the plus side, little chance of your customer absconding without paying eventually We had a tacit acceptance that small suppliers increased their rates to cover the delays (and you should )

I recall sitting with one supplier who was on 90 day terms and I had to tell him we were moving him to 120 day - his response was 'good I'll look forward to the improvement!'

 

[slim_boy_fat]

'Twas always thus - I know of international corporations which employ the same tactics.

 

[Robotstar5]

Austin/BL/Rover (delete as applicable) used the big company late payment tactics and sent a few suppliers under due to cashflow problems, it meant we ended up with machines that had no manufacturer back-up/spares supply

 

[rcx132]

With my new business I'm taking the opportunity to state that the rates offered are subject to 30 day payment terms. I thought that may get better received than applying late payment charges which get very badly received.

@8ob, how does it work with the factoring? I once forgot to pay a supplier and I got a very serious letter from HSBC as the supplier was using HSBC factoring. I thought it was good because it's the bank chasing and not the supplier and gets round the age old problem that clients take it personally when you chase debts, e.g. if I threaten legal action against a client it is sometimes taken very badly. But if it's the factoring bank then it's different.

My worry with factoring is that I don't think the debt ever legally belongs to the bank, it's ultimately still your debt, the bank is just collecting it for you and paying you in advance.

There's another serious drawback of long payment terms, they have you by the balls if they want to demand anything. If they want something done for free and there's thousands of £££ hanging because you've done three months work you're probably going to comply. And if anything happens to the client, e.g. go into administration, and they owe you three months of pay you are in serious trouble.

And us nice guys get double fooked because I pay my suppliers within a week regardless of whether client has paid me.

 

[Hood]

I assume their business is too important to you to put a 10% charge on any late payments beyond the 90 days......

When I was starting up I was thinking of doing that but was advised it could be problematic and really needed the big spiel of terms and conditions on the back and a lawyer would be required to write that up. Whether that was true or not I have no idea but I had a different solution.
When I send out my bills they have a 10% added and if the payment is made within a week they get a 10% reduction, so in effect if I get paid within a week they get it at the correct price, if not they are in essence paying a 10% surcharge and no lawyers required.

 

[rcx132]

I assume their business is too important to you to put a 10% charge on any late payments beyond the 90 days.

Can they find another firm easily that will do what you provide for the same price and to the same standard, that's the clincher.

If you guys recall I had serious stress and closed my IT business, so now I'm trying to find IT consultancy work (less stress). Basically I'm not in a position to be rejecting work.

 

[octo0072000]

Always been the same little man is the bankers for the big man/company
i did a bit of work for ICI in Doncaster there terms was 150 days like it or lump it this was in 1988 by the time i got payed was 180 days so in 1988 i was about £67000 out of pocket this was road haulage diesel was at the time
29 pence a litre

 

[brightspark]

add 20 percent on your bill without showing it then your covered for delay that's all I do

 

[Kent]

Firstly it's up to the seller what the payment terms are. You do not need to except them unless you already have. Frankly I should not as it shows they haven't go the cash.
Some very large companies will try and take the proverbial but others will pay on invoice - guess what ask and tell them to do one if you do t like it

 

[gordon stephenson]

When I worked for ICI, their payment policy at the time was 90 days after the end of the month in which the invoice was submitted,

 

[roofman]

This has been mentioned in another thread a long time ago and my advice is the same now as then...When i send out an estimate for works it contains MY terms and conditions and number 1 of a very long specified list is All payments due on completion of works unless other arrangements have been discussed and agreed by both party's.

 

[500e]

As Friday says always been the same, ( I remember a large white goods spokesperson years ago say on TV if we hurt our suppliers will hurt more) very difficult for start up's & growing businesses, been there nearly went under once or twice, the nice thing is if you can get to a point where their work is not that important & you have a niche product or service We did started to do less for one at a slower delivery until we just forgot to do anything, their screaming was really good to hear, then we pointed out their terms had gone from 60 to 140 days so our delivery's were doing the same, this is great if you can afford it, they tried 2 other suppliers then came back by then we had changed our terms to payment up front same as roofman.
Never tried factoring as it seemed to be a large part of the profit 7 if they were not paid they could claw back, don't know if it is still the same

 

[8ob]

Imho terms and conditions on an invoice carry no weight at all with the bigger boys, they will only pay when they are ready. If you try the legal route they will hang you out to dry, a friend tried this in court and the main contractors solicitor produced a document signed by my friend stating that he would adhere to their terms and conditions. Its was in the small print on the contractors approval form which he signed, expensive day in court for him and soured the working relationship. My advice would be to get on first name terms with someone in accounts or just forget working for the bigger outfits

Bob

 

[Kayos]

I've done some work for the owner of a fairly big company (in his own house) and he's been since day one, pre arranged stuff not done causing delays so a 2 day job took 3.

He paid half the invoice a week late, I've just resent the original quote and directed him to the t's and c's, so I will be adding on £10 per day it's late plus interest, if I don't have it in 7 days I'm going straight to court. I also reminded him I have not commissioned and are not liable for any problems if he gets someone else in, wonder if they know where the drain off is, under the cylinder in the loft? I may not have tightened it because checking all joints before commissioning is in my method statement, but I haven't commissioned it......

 

[mike os]

Next time invoice them as soon as the job is booked on your terms.. 7 days is plenty , and if it's not paid on your terms don't bother to start the job. When they want to know why it's not done tell them they have outstanding invoices and you no longer work for companies that don't pay on time

As long as you put up with it the worse it will get.