Home – New Forums Money matters Is witholding payments a common accounting practice?

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  • #1202147
    NickKaro
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    I would never advise a client to do this and I hope that others don’t. As pointed out a number of times above, it’s not a good strategy (particularly with interest rates at record lows) and could be considered negligent advice…

    #1202148
    LucasArthur
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    NickKaro, post: 239881, member: 12942 wrote:
    I would never advise a client to do this and I hope that others don’t. As pointed out a number of times above, it’s not a good strategy (particularly with interest rates at record lows) and could be considered negligent advice…

    My accountant wanted me to hold payments, there was one guy that charged me an arm and a leg – typical legal profession, but i paid on time.. i think.. LOL ;)

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1202149
    atud1
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    I highly doubt withholding payments until contacted to earn “interest” is their primary aim. It will most likely be due to cash flow issues or you’re just not that important to them. Either way, ask yourself whether the trouble of chasing payment is worth having their business or not.

    #1202150
    Mischelle
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    gingerbeardhs, post: 239749, member: 84763 wrote:
    Real Estate agents don’t tend to be a problem, the ones I service have 14 day payment cycles and are pretty consistent. I’ve thought about adding a clause along the lines of ‘payments not received within 14 days attract a 20% surcharge to cover costs unless other terms have been negotiated’ but then that would rub my good clients the wrong way..

    Hi Tait,

    My accountant has NEVER said hold payment ever.

    I feel your pain buddy, I had a VERY LARGE client who we worked with for over 10 years, they pushed payments out to 90 and 120 days (on a 14 day invoice) and that was standard practice for them, I would have to cover the costs of consultants on site and pay them fortnightly and then carry that cost for up to 3 months.

    So we implemented the late payment surcharge on them, and it was about 20% and low and behold they started paying every fortnight landing in my bank every second Thursday.

    Yes we ran a risk of loosing them, but we could not carry on with this poor practice. So you may loose them, but by the sound of it, you don’t seem phased by that :)

    #1202151
    gingerbeardhs
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    Thanks Michelle,

    I’m not really concerned about losing them. In fact I did a quote for them last week and it seemed that I was going to get the job. I made a decision to cancel the quote (for other reasons – the job was way too big and it had the risk that I would have to register for GST) because the stress of it was too much when they would want to complete it.

    #1202152
    Steve SME Business Coach
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    LucasArthur, post: 239812, member: 34537 wrote:
    treat those how you wish to be treated… should about cover it?

    Bang on the money!

    In my experience, you are best to focus on those clients who hold similar ethics and values to yourself.

    If you have clients who constantly make excuses about late payments, I would suggest that they do not share your ethics and values.

    The cost to you physically (time) and mentally (the headspace it puts you in) when chasing consistently late payers negates any benefit their business may bring you.

    When you are working only with clients who do share your ethics and values, you’ll be much more productive and happy and so will they. Win/win!

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