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  • #964796
    Benedict
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    I had plans to write this article but something happened today to shoot it to the top of my list:

    Today I got an email from a client with a delinquent account who I was re-familiarising with my Terms of Trade: ‘Payment in Advance’, something already agreed upon. The email said:

    “I understand that be (sic) what you publish but in reality not the way people do business.. I have set the terms which is the only way we can work.. I don’t have the time to run around getting payment for something that hasn’t happened before I need it done.. Let me know”

    So what do I do? Let this business define my terms of trade for me? It is tempting because in tight times clients are money right. But clients who use my precious time and expertise without honouring agreements are not great for either my my self-esteem or bank account. As someone said to me recently: “Handing over a product you aren’t getting payed for is not doing business it is starving yourself”.

    So I let the client know that the attitude was not acceptable and that I set my terms of business and they were already accepted. Any changes would have to be negotiated on equal terms.

    I assume as of now I have lost a client.

    As of today I have an opening for a good client who values a life lived.

    You can read the whole article at http://www.brmwebconsulting.com/articles/terms_of_trade.htm

    I offer this to all here as a reminder that you don’t have to do business with Vikings if you don’t want to.

    :-)

    #1008140
    TSH-SR
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    Hi Benedict
    Great work today, that is one more dodgy business that should close down.

    Too busy to organise to pay their bills – that is so precious isn’t it, especially when they are already overdue.

    Your comment that “in tight times clients are money right” is only true when their money is in your bank account.

    Your post should be mandatory reading for all of the new and start up soloists, we are in business to make money and a decent living the way WE want to do it. We do not have to be sheep and conform to the way Grandad or everyone else in any particular sector does business.

    As small businesses we must abide by the terms of the large suppliers we purchase from, and most of us pride ourselves on maintaining that relationship by paying on time, we want to have a good payment record.

    So I do not understand why sometimes some small businesses think they are more important than our business and our terms.

    I trust that you will find a replacement client that has your own business values.

    Regards Tony

    #1008141
    Benedict
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    Thanks Tony

    :)

    #1008142
    Renee Barber
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    Hi Benedict

    First of all, I’m sorry that happened to you. I went through a similar situation a while back which prompted me to change my terms to a 50% deposit, 50% due upon completion schema, unless it’s something that involves printing. In that case, since I have a supplier dependency, the entire balance is due before the printing is organised.

    I have also put on a seven day term. I pay my bills within that timeframe so I don’t want to do business with companies that cannot or will not (usually more to the point) do the same. This may lose me some potential business, but I suppose potential business doesn’t pay the bills.

    By the way, I love the touches of history in your blog … Very nicely done.

    Well, hang in there. I’m sure a great client is right around the corner. When you ‘make a space’, amazing things can (and do) happen.

    Ok, it’s time for bluerays! :-)

    #1008143
    BB
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    Hey Benedict…

    Immediately, as I read your post, I found the clue…

    Benedict, post: 7571 wrote:
    I don’t have the time to run around getting payment for something that hasn’t happened before I need it done..
    :-)

    Forget about your ‘agreement’ – This person hasn’t got the money to pay you anyway!!

    Don’t beat yourself up over this -you made the right decision!

    Cheers

    B.B.

    #1008145
    Benedict
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    • Total posts: 144
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    Thanks guys

    Renee: I love history because it is like statistics. It tells you absolutely anything you want it to with a bit of smoke and mirrors 😆 No really I do like history and I needed to point out that this practice is savage. I think I have an article on Vikings in me. Who doesn’t like a horny man?? :O

    B.B. I think you may be about right. My gut tells me that while the coin is there maybe the permission for the job wasn’t. An earlier email was asking me alter in invoice to another person in another state who I haven’t heard of.

    :)

    #1008146
    whateverbusinesssolution
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    As a bit of an aside on this thread, I am constantly amazed that business that do offer terms infrequently enforce them…ie allow their customers to dictate their terms. One of the recurrant issues that we see when we complete a business review is cash flow shortages and unsustainable debt loads … some simple steps such as looking at your terms of trade can assist both.

    Cheers, Warren

    #1008148
    Benedict
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    whateverbusinesssolution, post: 7714 wrote:
    As a bit of an aside on this thread, I am constantly amazed that business that do offer terms infrequently enforce them…ie allow their customers to dictate their terms. One of the recurrant issues that we see when we complete a business review is cash flow shortages and unsustainable debt loads … some simple steps such as looking at your terms of trade can assist both.

    Cheers, Warren

    Hi Warren

    Yes, I agree. That is handled in the main article where I look at why in reality the customer is generally setting the terms at the expense of the supplier and being allowed to.

    Amazing yet scary stuff.

    :-)

    #1008150
    JagO1213
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    Hi Benedict,

    From experience in my firm, we request our clients to pay 50% upfront and generally we wont start our work until such time as we receive a cheque.

    Given our reports are decision making tools in the acquisition process, our clients are the only ones to lose out by the delays so generally they have no choice but to pay up.

    If we have a long term relationship then some time we let the 50% upfront payment slip, but will usually bill them in the middle of the project.

    I guess it is a little different when dealing with smaller clients. I guess they need to see the importance of your service to their business.

    #1008152
    Adam Randall
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    A great post, this is a difficult one, it can be tempting sometimes to break your own credit terms.

    This happens to me, we had one client who had an average time to pay of 6 months, in the end we put our foot down. we explained no more work would be done on his account until payment of 8 invoices outstanding.

    We sent email reminders every month and rang the office every other month and always got some excuse.

    After 6 months he had the nerve to question the invoices and the work done saying that he had issues with the work completed and the amounts were excessive. I couldnt even remember what was done and in all reality, neither did he.

    He ended up having a serious email problem that needed fixing, he pleaded for us to come and fix the problem saying he would clear up the invoices after the urgent work had been completed, we said no, he went to another provider and we never did see the money.

    A solicitor and a Rotarian, I suppose one cancels the other out eh:)

    #1008154
    Benedict
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    Thanks Adam. I think we all have this issue at least once. And probably every time we allow some one to do it to us. Sorry to hear about your loss.

    Update: I had a call from the big boss of the company, that was ok, and payment was made. That was followed but a very snotty email from the GM who started making threats. Good riddance.

    :-)

    #1008156
    Credit Manager
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    • Total posts: 78
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    “After 6 months he had the nerve to question the invoices and the work done saying that he had issues with the work completed and the amounts were excessive. I couldnt even remember what was done and in all reality, neither did he.”

    That’s a common practice when someone is looking for an excuse not to pay an invoice Adam.
    It is very useful but rarely done to include additional clauses in your payment terms which specify a time limit for customers to notify you of any defect or failure to fulfill the quote.

    I include such a clause in nearly all the terms and conditions i draft for clients.
    It takes away another excuse not to pay.
    Paul
    http://www.nbservices.com.au

    #1008158
    Gerty Photography
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    • Total posts: 57
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    Thankfully I haven’t had this experience yet, though I’m sure I’ll come across it some time in the future. I just wanted to thank you all for sharing your experiences – it highlights the importance of soloists being proactive and clearly establishing business terms early on. Once we have it clear in our own mind how we are willing to trade, we can then discuss it with new clients and be prepared to “defend” our position.

    Thanks for the tips, I’m off to re-visit my T&Cs.

    Jess

    [email protected]
    http://www.gertyphotography.com.au

    #1008160
    EagerToSucceed
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    Wow, what a lucky bunch! It makes me wish to be in your business!! We unfortunately have 30 Day EOM after EOM accounts. So it is usually over 2 months untill we see our money! Having said that our creditor accounts are 30 day as well. This makes things crucial for timely payments during the transition from our quiet period to the peak season, which is accompanied by a large transaction growth. Depending on your business type, you can’t always demand a deposit or prepayment, unless it is a new account, or one with a bad credit history. BUT if you do find someone who is willing to prepay, KEEP THEM!! You can’t always be hammering down onto your accounts, as it will strain the relation between your business and theirs, but you can not let them get out of hand either, and having a few prepay/COD accounts works wonders for the cashflow. That is why I would LOVE to have your terms in our business!!! ;)

    #1008162
    Benedict
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    What is your business Mr Succeed?

    I see no reason that any industry should HAVE to have pay-later terms (other than greed from buyers – read the initial terms of trade article).

    All businesses should have at least partial up-front payment as the seller has to invest to provide the product and that is money that the buyer is otherwise borrowing (stealing on no-interest terms in most cases).

    Maybe you can offer a discount to buyers who pay in advance or COD. You would then need to be firm with creditors who try to insist on that discount for themselves whilst still using your cashflow for themselves.

    :-)

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