First Unpayed Bill

[jhoppe]

Good Morning All,

I could not find an instance on the forum that matches my predicament, but basically, I've run into my first non-payment from a business. It was only one hour of Ipod support/ training, but its the principle as well.

I did have the client's employee sign my form as she said the on-duty employee could sign for her (the owner). My standard form lists my fees and when I can expect them to pay for my services.

I left an email message for her about 2 weeks after the the net30 specified on the invoice was due...no response.

I realize that I should probably call the owner next (and leave a message is she does not answer), but I do not want to seem too pushy.

Anyone have an example timeline that I should follow, and if no response for a certain amount of time, what should I do?

Thanks!

 

[Simmy]

You need to leave a phone message or visit her in person aswell as post out another copy of the invoice. If she hasn't paid in another 2 weeks, start adding on interest - it will be a small amount but it might make her panic a bit more if she realises the amount is going up. I can't remember how the interest rate works now but I think you can charge slightly over the interest rate you get from your bank to cover interest lost and time/money spent chasing after the customer.

I personally would only consider legal action if they don't pay after 3 months.

 

[seedubya]

This is probably more a case of late payment as opposed to non-payment. I wouldn't stress too much over it. At this stage calling the owner direct and asking to be paid immediately is not pushy at all. I'd also email, sms, voicemail, snail-mail, call to her house/office or whatever medium you can use to make contact. Politely but firmly demand immediate payment and accept any excuses offered to now but none for the future, if you know what I mean.

 

[tartis]

In my opinion business accounts are always slow pay. I seem to always have to send followup letters and emails to collect, but not one has gone un-paid.

I set my terms to net-10, and it gives me more time to collect before it starts hurting my bottom line. I would not call them at home if you want future business, but I you may want to stop in and give them a chat.

 

[TimeCode]

I would not call them at home if you want future business, but I you may want to stop in and give them a chat.

Stop in at work... Definitely!!!

We just had a long time Business client do this same thing to us. They ran up a $550.00 bill, made $250.00 deposit, and then that was it. Fast forward to their due date, excuse central. Fast forward 1 month and 1 week later, NO answer on the phone, so I personally dropped in. IT was Guilt trip, and excuse city. I advised the client that I Have been more then patient in waiting for payment, I have given them every chance to make good, I have been very understanding of their excuses, and problems, However the bill is way past due, and I will not wait any longer. This client got crazy, literally, ripping the invoice out of my hands, throwing it back at me, Taking a check, and throwing it at me, all in front of her customers and fellow workers. I calmly picked up the check, said "thank you for your payment, and have a very nice day" and calmly walked out in my suit and tie. The check was deposited, and cleared the next day.


I can tell you this, she did call back the next day and apologize, however I advised her that after all we have done for her, the way she treated me was very unprofessional, rude, and demeaning to say the least. I also advised this person that we could no longer continue to do work for them, or their business, and they would have to find another service provider.

Well done. To date I haven't had the cajones to to do that so I've let a little bit go unpaid. I hate it but I never know how far to take things.

Advanced Computer Group Inc, thank you for the example.

On a note of what I did, I recently went and purchased a "PAST DUE" stamp and it worked on the only client that was past due. They were an Alzheimers home. I guess they just forgot to pay it.

 

[e2346437]

You need to leave a phone message or visit her in person aswell as post out another copy of the invoice. If she hasn't paid in another 2 weeks, start adding on interest - it will be a small amount but it might make her panic a bit more if she realises the amount is going up. I can't remember how the interest rate works now but I think you can charge slightly over the interest rate you get from your bank to cover interest lost and time/money spent chasing after the customer.

I personally would only consider legal action if they don't pay after 3 months.

I realize that you are in the UK but in my state in the US there are laws governing how much interest I can charge. The max I can charge is 1.5% per month, any more and I could get in legal trouble.

In addition, there are laws governing how I can go about collection. For example, I can call them as many times as I want, but if I get them on the phone I can only have two coversations with them per week regarding their debt. If they hang up or the secretary transfers the call and it gets dropped, that counts as one call.

For what it's worth, make sure you know what finance charges are legal and don't run afoul of collection laws.

Eric

 

[Simmy]

Yes there are laws regarding interest rates in the UK too, but as I said I can't remember what they are. I've never actually had to charge interest to someone myself luckily. Having just looked it up though, it's the Bank of England base rate plus upto 8%. I wonder why yours is so low? It's barely worth charging 1.5% :\

I've never heard anything about only contacting a client upto twice a week though. It doesn't appear to mention anything about it in the UK. Any other UK folk know about this?

 

[ICEinLAVA]

i recently had 2 clients do non payment on their invoices within 2 months. My first ones ever since my start of business. First off, my terms are Net15 and the first business client i waited 30 days past the due before i mailed him a copy of the invoce with a payment past due letter. Yeah i wanted to be paid but i wasn't in a rush since i was also doing work at his home and getting paid there. The second business client owed me over a thousand over 3 invoices. since i already created a payment past due letter, i just revised it and mailed it with the 3 invoices 2 days after the payment term was up.

 

[focuz]

They have real strict laws about collecting debt in the US. This is because creditors used to abuse people calling them every second and demanding payment and using scare tactics. So alot of lawsuits came up and restricted everyone.

I would just call the owner and tell them its been awhile and you will need payment for services. Don't charge any interest unless you don't hear back from the owner in a month.

 

[focuz]

Also wanted to add in, Bruce this is an awesome article suggestion. What are the exact steps you take when someone is late on payment or worse yet, doesn't pay. It be an awesome follow up for your last article on 'when to charge'

 

[SaylorComputer]

I think it all depends on the Client and if you want to keep them as a continued source of income. Obviously, clients you have had for years deserve less stress then the new client who is late on their first bill! I dont give credit to new clients. Invoice is "Due on Receipt". Im not a bank to float invoices. My 3+ year clients get Net 15. I also use an assistant who does my "collection calls". Worth its weight in gold. She states she is calling from the Accounts Receivable Dept. and is pushy as the time goes on. Having that second voice keeps my relationship golden with the client. If they say anything, I just reply, "She gets paid big bucks to collect the companys money, and she is doing her job well!" Blame it all on her. Works great. Also good for Estimates, PO's etc etc!

 

[jj2000]

"She gets paid big bucks to collect the companys money, and she is doing her job well!" Blame it all on her

i used to use a similar line when the wife worked for me and got everyone to put the blame on her