Getting Accounts Paid?

[MBG]

I run a small business in 3D architectural visualization. Been going for a few years now with no major complaints. I have never felt the need for an accountant, but I could probably use the advice of one at the moment.

Once I complete a job, I give my clients 4 weeks to pay. But getting accounts payed is hard sometimes...and seems to be getting worse. I hate sending out nasty letters to try and scare people into paying, but it's what I have to do sometimes when the 'friendly reminder' is ignored.

Like I said, it's getting worse and is starting to interfere with the running of my business and my own quality of life.

Anyway, down to my actual question. What is the best way to give these people a proverbial kick in the butt? Late fees maybe? Any suggestions are welcome. I just want to be payed on time without annoying my clients. :/

Most of my clients are architects, building designers and real estate agents.

[Astrid]

Hi

What do you tell your clients in your T&C? Do you charge any interests on overdue invoices?

I give 14 days to pay, usually one reminder is enough .. apart from one or two cases per year or so.

Cheers
Astrid

PS: oh, forgot - do you ask for upfront payments?

[MBG]

Hi Astrid, thanks for the reply.

No upfront payments, I am scared this could scare off new clients who are not familiar with my type of business. My T&C for payment are 4 weeks, then I send a 'friendly reminder', 7 days after that I send a final notice.

No interest on late payments, this is what I am thinking to do. What would be a standard amount? I would be classed as a graphic artist.

Never have any complaints from clients - they are happy with my work. Some even have the nerve to ask for more work done, even when accounts are overdue.

[Astrid]

Some even have the nerve to ask for more work done, even when accounts are overdue.

Och, that's normal .... ;-)


If you send out your T&C with a paragraph on upfront payment and interests on overdue invoices I think most of the professional clients are fine with it.

I ask for 50% upfront for any job over $250 - but I have to admit with some clients I waive that point but they are usually the ones who pay without problems.

I think 30 days is far too long .. I am even thinking of changing it to 7 days.

Re interests - I got the advice of 2.5% per day

[Adam Randall]

Originally Posted by MBG

Never have any complaints from clients - they are happy with my work. Some even have the nerve to ask for more work done, even when accounts are overdue.

There is a new client payment plan recently released that may help with these scenarios.

Our software prevents work being completed unless a payment is made on overdue accounts.

[Renee Barber]

I believe as long as you make your terms clear at the outset, you'll generally be fine. For new clients, my terms are a 50% deposit with 50% due upon completion of the job, unless it's a very large editing job and then I require 25% at about the 75% mark. I also have a seven day term.

Chasing people around for money is a huge waste of time and energy so I'd really start to look at how much time you're spending and what you're really afraid of ...

Why not test out the new payment approach on a new client and see how you go? I'd also use it on the people who haven't paid you and want more work. I'd say it's time for a bit of 'tough love' on those.

Anyway, I know it's scary at first to 'demand' payment, but you're running a business, not a charity.

[DebtCollector]

The fundemental priciple with all debt collection is consistency. By this, I mean a step by step process which you need to follow. Which involves contact via the telephone not "friendly reminders".

Your first call should alway be a gentle reminder that payment is due.
This approach allows him to save face by claiming he did not realize or forgot.
Alway try to get a date from the debtor of when you can expect payment. This gives you date to follow up if payment is not received. But you must keep following up when payment is not recieved, don't call them then drop it for a few weeks as all previous chasing will be undone. Remember to keep up a friendly demeanor.

In most case's a certain percentage will pay up as it shows your company does not intend to let this debt vanish and that you are on top of your accounts.

When this does not work call us.

[Leap Media]

Originally Posted by MBG

My T&C for payment are 4 weeks, then I send a 'friendly reminder', 7 days after that I send a final notice.

IMHO, that's way to long. Maximum would be 14 days, many people use 7. An automated billing system saves so much hassle in this regard. For example, a system I use automatically generates the invoice, sends out reminders 3 days before, on the day, the day after expiry and 7 days after expiry.

From experience, the best method of getting outstanding payments settled is adding late fees to the invoice - most people pay up pretty quick.

Up-front payments definitely help too as most people have said.

Cheers,
Joel

[DebtCollector]

I hear a lot of people on this forum talking about the charge of late fees on overdue accounts.

Do not charge anyone a late fee, unless you want to ruin any goodwill you have built with that client. Apart from being illegal (unless they have signed contracted agreeing to those terms, and anyone who signs that sort of a contract with a small business needs his/her head read) it really is bad form. It's ok for the big banks and telcos to charge late fees because they don't care if they keep your business or not. You are much better of to offer discounts if they pay in a certain time frame:

10% off if payed in 7days of invoice.
5% off if payed in 14 Days of invoice.

Not precisely as above, but you get the idea. Offer incentives to get them to pay you on time or earlier.

You will soon sort out the good payer from the bad and if they are really bad you drop them faster than a hot iron and give them to a debt collector. Remember your a small business, it's all about personal service. Not how much you can screw them for. Leave that for the big boys.

[Leap Media]

Originally Posted by Debt Collector

Do not charge anyone a late fee, unless you want to ruin any goodwill you have built with that client.
......
Remember your a small business, it's all about personal service. Not how much you can screw them for. Leave that for the big boys.

I 99% disagree. The 1% I agree with is the part about personal service, it's very important.

The other 99% is about trying to 'screw them'. Correct me if I'm wrong, but they are the ones who agreed to your payment terms, and their payment is well overdue. As a business owner, cash flow is very important to the stability of a business, so you do have to ensure you get paid on time. From experience, in about 90% of cases, adding the overdue fee to an invoice and resending had outstanding bills paid in less than 2 days, and not a single one of those clients has packed up shop and moved on.

I do not apply overdue fees to 'screw' clients, but merely to encourage them to pay their outstanding fees for service.

Joel