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Invoice question (and a bit of a moan!)

Discussion in 'Business Advice for Start-ups' started by AntMercer, Jul 26, 2012.

  1.  
    AntMercer

    AntMercer Applicant

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    Hi all,

    Just found out some news which has knackered up my cashflow for the next few weeks.

    I completed some animation work for a client, send in my invoice which has a "please pay within 14 days" line on it - same as on the contract that I drafted and had agreed to before I started the work. I sent the invoice in 10 days ago. The invoice for the last work I did for them was cleared in no time so I emailed today to ask when to expect payment and was told 16th August, which'll be 30+ days after the invoice is dated.

    Absolute pain.

    Any advice on how crow-bar payment from them sooner?
    Any advice on how to prevent this happening in the future?

    I can't afford to have this kind of gap inbetween payments!

    Thanks,

    Ant.
     
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  2.  
    JCTurner

    JCTurner Graduate

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    Did any order they send show that they would pay as a monthly account (end of the month following invoice date)?

    If not, then your terms should be adhered to.
    Sent a letter (via email and post) saying that they have 7 days to pay or your solicitor will be informed.
    Find the right solicitor and they will issue a LBA (letter before action) for a couple of quid plus VAT.
    Whenever I have started this process, 75% of the time, full payment arrives just after the first letter.

    If you let it go on, you could never get paid.
     
  3.  
    AntMercer

    AntMercer Applicant

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    Hi James,

    Thanks for the reply, I've calmed down a little since this afternoon.

    It's turning out to be a strange situation. There was no order as such, just an email agreement of the deliverables and terms. Since I posted my initial grumble I've had another email saying that (the woman who contracted me) has spoken to her finance director who said that "...she has stipulated that our terms and conditions are strictly 30 days." Terms that I never saw. I drafted the contract for the work and had email confirmation that they were happy about it and never saw anything about their terms. A weird situation.

    Thanks so much for the advice as well, James. I'll certainly bear it in mind if - and fingers crossed it doesn't - a similar situation crops up in the future. But, now I've calmed down, I think I'm just going to have to grin and bear it. I've worked for this company before, and this early on in my business I'd like to grow the list of clients rather than antagonise them with solicitors letters. I've no doubt that they will pay, it's just the goal-post-moving way that the "when" has turned out. Also, by the time I'd gone through the admin of solicitors letters and legal stuff, it'll probably be the 16th anyway!

    'Course, if a massive wodge of cash hasn't appeared in my account on the 16th, I'll be following your advice to. the. letter.

    Many thanks,

    Ant.
     
  4.  
    hdm

    hdm Trainee Lab Tech

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    Hello Ant

    Sorry to hear about your dilemma. It would have been a lot easier if they were a brand new client to ask for a percentage of the costs in advance. If serious about the work, that shouldn't be a problem for them.

    However, with established clients, would you be able to ask for an official Purchase Order in future? That should make it more secure.

    I hope it all resolves amicably.
     
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    Gerard

    Gerard Applicant

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    I have found that larger companies have 2 payroll days per month. They do not allow for the smaller companies that have a smaller turnover and less cash flow. It's important that you have a clear idea of how each company works before you start the work and plan accordingly for your invoices.
    They should have told you before they started. Often in large organisations the person you are dealing with has no idea of how the accounts dept is run within their own company.
     
  6.  
    Safe_Collections

    Safe_Collections Applicant

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    Hi Ant,

    It's our first post so be gentle :)

    The two lines above would seem to be key in this instance. If Big Co agreed to your payment terms/contract and did not get your acceptance of their purchasing terms then yours are legally the only ones in effect.

    They may say that they have 30 days terms, but unless you have agreed then they are not binding.

    Our suggestion as you have worked for this company before is to have a quiet word with someone friendly and see if you can get any help that way.

    An LBA at this point would probably do more harm than good and potentially damage the relationship, plus it is unlikely to help you get paid any sooner as in the clients eyes it isn't even overdue as yet.
     
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    JCTurner

    JCTurner Graduate

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    Always wise to send a reminder letter of your own before a LBA.
    As I say above, 75% of the time that works on its own.
     
  8.  
    krossiter

    krossiter Freshman

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    No matter how big a company I'm working with, always always stick to my own terms.

    50% upfront 50% at the end when they're happy - with 30 days each time.

    We make this really clear throughout communication, and if it doesn't happen (which is very rare) we've gone down to their office to ask where it is.

    We also don't usually give the final files until payment is complete - so that encourages them.

    Hope you get it sorted!!
     
  9.  
    pete

    pete Junior Lab Tech

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    I thought (and I may be wrong) that companies have a standard time of 30 days to settle their invoices.
     
  10.  
    paultgreen

    paultgreen Trainee Lab Tech

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    On an aside, why do we still work to 30, 60 and 90 day terms? A friend of mine brought up a valid point.. Terms were written and standardised in a day where you had to send an invoice by mail, wait for it to arrive, the client then send it by internal mail to the finance office, then the finance office to raise a cheque, get a director to sign it, and send it out via mail..

    In reality, when we get an invoice (with exception of staffing invoices which are processed fortnightly) it comes in via email or edocs, and it gets paid via FPI when it comes to me.

    With our terms, for a new client, it's 50% up front, 50% on the last day of a job, for ongoing customers, we insist on funds being cleared prior to show-down on the event. If they renege, I'm in the position that I've normally got two ugly dogs and a few even uglier security guys who can assist in the successful settlement. To be fair, I've never had to resort to that tactic, as we risk assess and credit check clients first.

    Back on topic:

    It sounds like what has happened to you is just being suckered in to big business, and them not wanting to help the little guy.. Do they like your work? If so, the line I've used in the past was "unfortunately our terms are not mutually compatible, and I feel we can no longer work together" may work - To make out that there's nobody in the building that can sign a cheque is absolute b*llocks. They are quite possibly just seeing how far they can get you to bend and manipulate, and by conforming, you're allowing them to get a measure for you that you may not want in times to come.
     
  11.  
    JoebeeKenobi

    JoebeeKenobi Freshman

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    My advice from operating as both a Sole Proprietor and a Ltd Co. Director is:-

    1. If you are dealing with a small company you will usually have more flexibility to get quick payment because often the person who gave you the order is also the person that signs the cheque. Larger departmentalised companies will almost always have a '30 day' payment policy (though I swear some have a 'don't pay till we are chased at least 3 times' policy!). Although '30 days' policy usually seems to mean on whatever day in the month following receipt of your invoice that they usually process their invoice payments (could be almost 60 days if they pay on the 30th of the month and you send in an invoice dated the 1st!).

    2. Especially if you are delivering a product or service that you can't easily take back or suspend service, get a deposit up front to at least alleviate any cashflow from up front costs you might incur. Even more important if its a new customer with no history.

    3. If its a regular customer, make a 'friend' with someone in the accounts payable department (you'll be suprised how effective this can be!)

    Joel
     
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    Mark D

    Mark D Freshman

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    I think its a metter of how you do the business with the clients ( i strictly refer on payment before starting the job /s ). You could ask a small upfront, enough to cover the time, while you receive the rest of the invoice when you finish the job.

    If you have a reputation already online, it should be no problem for the clients..
     
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    excalibur

    excalibur Applicant

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    Hi Pete, There is no law that states you have to give clients credit period,whether they ask for 30 net,60net or 90 net, they have no legal right to do so, however if you agree terms and conditions either writen or verbally then you are covered under The late payment of commercial debts act 1998, and can recover the debt plus charge late payment penalties ,plus add interest to the invoiced ammount.
    I hope this helps clarify the issue.
     
  14.  
    AntMercer

    AntMercer Applicant

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    Wow, Hi everyone! Lots of postings on this question since I last checked on here. Thanks to all for the advice and the support. It's much appreciated.

    My 30 days of irritation end tomorrow. Hopefully with a chunk-o-change in my account, if not, thanks to you guys, I know how to proceed and chase it down.

    Thanks again everyone.
     
  15.  
    ISS

    ISS Son of Victor Meldrew Premium Member

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    We have a range of terms dependent upon the client.

    All clients sign our T and C before we supply kit, or work from them.

    If I may so bold I'd suggest you agree terms prior to doing work to avoid these kinds of misunderstandings later. Also the advice to start issuing notice of solicitors letters in this circumstance is a tad OTT.

    Assuming of course you want to do more work for them. To recap get the T and C and terms sorted out in advance then (in the main) this kind of problem won't rear its head.

    Hope that helps.

    Jon
     
    Last edited by a moderator: Aug 15, 2012
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    excalibur

    excalibur Applicant

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    Jon. Why is legal action ott?

    There is no law states you mst give clients/customers credit(fact).

    Terms were agreed and if you read full thread you would have realised this.

    I have had 2 clients cause similiar problems and my terms are very clear so is my stance on late payment, as there IS a Law for dealing with late payments; the late payments of commercial depts act 1998.

    The client/customer budgets for services provided so should have funds available to pay immediately on completion.
    Simples really.
     
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    Mark

    Mark Moderator Staff Member

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    Have you disabled 'Topic Reply Notifications' in your control panel?
     
  18.  
    ISS

    ISS Son of Victor Meldrew Premium Member

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    The guy has done business before with these people, and from the looks of it is likely to do so again. The difference of opinion is over 2 weeks not whether or not the bill is being paid so I stick to my comment. Legal threats are OTT, and frankly childish and petulant in this circumstance.

    I'm aware that there is no law that says you must give people credit but thanks ever so much for clarifying it for people who might not be "in the know."
     
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    JCTurner

    JCTurner Graduate

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    I'm very hot on reminding when payment is due and following up on late payments.
    Why? Over £30k of bad debts in the last 8 years tends to sharpen you up a bit.

    I do agree that not every client needs legal intervention, which is why I call, write, remind first (as you should) before anything further. Then again, the client that you least expect can go under without notice, taking your money with them.

    It's a tricky balance and nothing personal should be allowed to intervene.
     
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    Mark Taylor

    Mark Taylor Graduate

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    Hi Ant,

    Sorry to hear about this - although it is quite a familiar story in the current climate.

    Some companies offer Early Settlement Discounts (ie 2% off if you pay within 5 days), but this doesn't always have an impact - sometimes clients take the discount and still pay later (arguing that you can clearly afford the lower price).

    On the whole, I think it is about getting the relationship off to the right start. Once the work is agreed, get a chat with the client and explain that as a small business you really need to get paid promptly... again, this won't always work but most people want to be decent and also want to keep suppliers they value on side (or is that just wishful thinking?)

    Good luck!

    M.
     

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