Late payment fees

[net-curtains]

My least favourite part of the job - I'm chasing up a client (multi-millionaires) again for late payment. They're now asking to be sent a printed version of the invoice before paying. I don't do printed invoices, I send a .pdf, and they were quite happy paying the first invoice this way.

They're obviously stalling and messing me about, what would you do? Should I refuse to send a printed version, stating we don't use that method, or just put up with it and send one (bearing in mind the invoice will take even longer to be paid)? 

How do you impose a late payment charge - should this be stated on the initial invoice?

[civ]

Charge them for the printed version 

http://www.payontime.co.uk/legislation/legislation_main.html

[Shirker]

Put up with it as part of business - I always think companies who faff about with late payment interest fees are a bit small and unprofessional. Same goes for PDF-only invoices I'm afraid - there's somthing a bit on-the-cheap about PDF-only. Print it and then chase it.

Given the numerous previous threads on here about chasing late payments I'm sure I'm on me own on this, but there you go. Our terms are 30 day from date of invoice but a lot only pay at the end of the following month in which the invoice was issued, while others only pay on 60 or 90 day terms no matter what we say. So be it, its up to us to choose whether to supply them or not again in the future. We've had a couple get to 180 days and at that point got a solicitor involved, but still didn't mess about with interest charges. Just because a company can apply them doesn't mean they should - it just doesn't look good.

[sarahA]

The link Oli gave is bookmarking material.

The downside to making a threat of late payment charges is that you're potentially unlikely to get business from the client again. But if that's not a concern then...

I would email them a copy of the PDF invoice again (we only send PDFs). If they've had over 30 days to pay, state on the email that they have 48 hours to make payment (we usually say as cleared funds, but that only works for BACS), otherwise you will impose a late payment charge of £XX (check how much on the link above), and you will then start to charge interest of 8.5% (or whatever 8 + the base rate is) added on a daily basis and it is up to them to ensure they pay the full amount. Underpayment will mean you will continue to charge interest on the remaining balance.

You can also link to the above link too just so that they can clarify this if they wish.

I would perhaps add to your website ts and cs if you have them about late payment charges, but just state that you reserve the right to charge them.

[sarahA]

I always think companies who faff about with late payment interest fees are a bit small and unprofessional.

As opposed to the bigger companies that can't be bothered to pay on time or, god forbid, as soon as they receive their invoice. Making up their own payment terms etc. and ignoring yours. Too many small businesses fold because their cashflow is so bad due to their clients not paying on time. The late payment fee isn't essentially a fee, it's to cover your time in having to continually chase them for payment. A few phone calls and emails soon add up in lost time.

Same goes for PDF-only invoices I'm afraid - there's somthing a bit on-the-cheap about PDF-only.

Or environmentally friendly and cost effective. Sure the end client may need to print the invoice (we don't, we just attach the PDF to the expenses record in our accounts), but you're still saving on the envelope and cost of a stamp. May not sound much but it all adds up.

We're about to set live a system for a client where their clients can log on and get their invoices. This will save our client around £50-80k a week in postage and printing costs.

[civ]

Put up with it as part of business - I always think companies who faff about with late payment interest fees are a bit small and unprofessional.

If I pay my internet/phone bill late, I get charged a fee. If I pay my gas/electric bill late, I get charged a fee. Neither company could be described as small by any stretch. (Unprofessional is another matter, but nothing to do with these fees )

there's somthing a bit on-the-cheap about PDF-only

Both companies will also email me my bills rather than print them out and post them.




A company who will pay 90 days after an invoice is due is not a client I would be worried about losing. Why should you have to wait so long to be paid for work you have already done - imagine if you only agreed to do the work 90 days after recieving payment!

Great article about this subject here -> http://john.onolan.org/how-to-kill-your-business-30-day-payment-terms/

[Shirker]

  See, I said I was on my own on this. Yes, I know all the arguments about paying on time, and I pay all our bills on time, but some clients will always pay late, and sometimes several months late, and that's a factor of being in business.

As for PDF-only invoices, again, I know all the green-wash which can support it but it looks cheap no matter how well the PDF is designed. We used to do all our quotes (rather than invoices) as PDFs but as an experiment started following them up with a hard copy in the post and over a period of six months we saw an 18% increase in the take-up of quotes - nothing else had changed other than sending a paper copy. I asked Sam to design a nice looking wallet-folder thing for them and all quotes are now sent same day by PDF for that instant response but also by post. Time and time again we've got jobs as the hard copy has made us stand out above the competition and in most cases we've been far from the cheapest but perception of quality has been higher than if we had e-mailed the information only. I know its unfashionable and I'm on my own on this, but PDF-only invoices are lazy.

[Mr Anderson]

and that's a factor of being in business.

It's a factor of being in business and having to deal with people who will see how long they can go without paying. There's nothing small or unprofessional about making them pay up on time or adding a penalty if they don't - although I've never added interest I always levied an admin fee on over due accounts to cover the time chasing payment, or suspending/unsuspending accounts; and I wouldn't care if customers left as a result, that way I'd be left with the ones who kept my business's cash flow healthy. I'd much rather do that than leave a payment hanging and then take the drastic step of getting solicitors involved without already having exhausted other more reasonable means. Legal action should be a last resort, and if you take it you have more chance of being successful if you have tried other methods first.

As for the printed invoice, do what Oli said and charge for it. Explain to them that you have an eco friendly paperless policy towards billing and charge on those occasions when forced to break it.

[Shirker]

and that's a factor of being in business.

As for the printed invoice, do what Oli said and charge for it. Explain to them that you have an eco friendly paperless policy towards billing and charge on those occasions when forced to break it.

   Yeah, right... Someone did that to me it would be the last invoice they'd ever be sending me.

[sarahA]

PDF-only invoices are lazy.

Sorry but I take offence to that. I don't particularly think I'm lazy at all and plenty of people I know who use PDF only invoices aren't either. We work extremely hard* and we don't necessarily have the time to get invoices printed off, into envelopes and nipping out to the postbox to get invoices posted on the same day as they're printed. (*I'm not saying you don't work hard either)

I'd rather not receive paper invoices either. I've got so much paperwork to file my drawers are overflowing with it. Much easier to chuck a PDF if in a folder on your computer or attach it to the expenses record in accounts. If HMRC wanted all the accounts then we'd just open them up and print them out.

[Mr Anderson]

and that's a factor of being in business.

As for the printed invoice, do what Oli said and charge for it. Explain to them that you have an eco friendly paperless policy towards billing and charge on those occasions when forced to break it.

    Yeah, right... Someone did that to me it would be the last invoice they'd ever be sending me.

Your bank, water company, electric and gas companies, phone company - they all possibly do it to you already.

[Shirker]

Your bank, water company, electric and gas companies, phone company - they all possibly do it to you already.

No they don't, they all send paper invoices. All of them have the option of e-mail only and I have selected no on that. The only invoices I get which are PDF only are some hosting (which really really really pisses me off by me having to go to them and login to get the invoice as they don't even PDF it - as a result that hosting will be cancelled when its next due), Google where I have no choice as they have the market sewn up, Sam (sorry mr H-S ) and our fuelcards where they send a weekly PDF invoice, and that's about it.

Sorry but I take offence to that.

As I said right at the beginning and harking back to the original 'should I send a paper copy', I'm sure I'm alone on this but I stand by it - a PDF-only invoice looks lazy and it looks like a company taking short cuts. To me, it reflects badly on the company doing it if there is no hard copy. I'm old fashioned but paper copies have meaning and gravitas, PDF doesn't.

with that. I'm off - got a batch of invoices to prepare, print and send

[Mr Anderson]

Your bank, water company, electric and gas companies, phone company - they all possibly do it to you already.

No they don't, they all send paper invoices.

As do ours. But how many of them give discounts to customers who opt out? Our phone company does, which amounts to the same thing.

[Mike@TheWhippinpost]

I'm with Shirkster, although I wouldn't characterise it as lazy; just a royal pain in the bum that cocks up my record-keeping and tears through ink.

[sarahA]

(At least for personal customers), BT, Virgin Media, Vodaphone, OneTel (so I assume TalkTalk) all charge extra for paper billing.

As I said right at the beginning and harking back to the original 'should I send a paper copy'

To be honest, it would depend on the client and how much it was for. If it's the first time, the client is either new or well liked, it's for a large sum etc. then we'd send a paper invoice if they requested one. However knowing / assuming that they're just using this as a method to delay payment even further to net-curtains, and that they had no issue with paying the first invoice then I don't see why they should suddenly require one, not when they can just print an invoice off.

We also don't enforce late payment fees, but I don't think it's right to make people feel unprofessional or guilty for enforcing them.

It was only a couple of years ago that you posted up in this forum about suffering badly over late payments, your mortgage had gone unpaid etc. You said then you'd tried to charge late payment fees but were basically told tough by your clients. Glad you've got out of that hole and it's great you can absorb late payments, but not everyone can.

[Shirker]

(At least for personal customers), BT, Virgin Media, Vodaphone, OneTel (so I assume TalkTalk) all charge extra for paper billing.

As I said right at the beginning and harking back to the original 'should I send a paper copy'

To be honest, it would depend on the client and how much it was for. If it's the first time, the client is either new or well liked, it's for a large sum etc. then we'd send a paper invoice if they requested one. However knowing / assuming that they're just using this as a method to delay payment even further to net-curtains, and that they had no issue with paying the first invoice then I don't see why they should suddenly require one, not when they can just print an invoice off.

We also don't enforce late payment fees, but I don't think it's right to make people feel unprofessional or guilty for enforcing them.

It was only a couple of years ago that you posted up in this forum about suffering badly over late payments, your mortgage had gone unpaid etc. You said then you'd tried to charge late payment fees but were basically told tough by your clients. Glad you've got out of that hole and it's great you can absorb late payments, but not everyone can.

We did indeed try it and it was a valuable lesson that late payment fees don't help and don't look good and my advice to anyone in business is always that just because you can charge an interest fee doesn't mean its a good idea to. Only a very small number of companies can get away with it and for those that do, size in relation to their customer is critical - such as the utilities. I've been there and tried it and it was a quick attempted fix which only harmed us. I don't think its professional to charge them and whether that makes someone feel bad by saying it then its too bad, it doesn't change the opinion or advice.

Companies will use tricks to delay payment and that's to be expected as part of business - its not as fair as we'd all like it to be and late payments damn near sunk us a while ago and I still have tens of thousands in personal debt which came from it. We've had companies wait until their payment is overdue, then return the invoice to us saying their company name was 'X Limited' not 'X Ltd.' therefore could we re-issue a new invoice in the 'correct' name as they couldn't pay it otherwise! It was fustrating but was just a delaying tactic and these come up from time to time.

 

[samhs]

I only ever post physical invoices to problem clients, and normally by registered post. Generally I find it quicker and easier not to post them, but I do have a wodge of stamps that get slowly dwindled through invoice sending (see Mr Shirks, you aint a problem client so you just get my special PDF ones!)

Where I do *completely* agree with Shirker is on the proposal/marketing side - following up with a paper version can massively increase conversion and helps establish a feel of quality over pure electronic comms.

We don't charge interest as a rule - only when we've got to the "2 months overdue, previous promises of payment and nothing forthcoming" that we roll that monkey out. I had to use this "hard nosed" approach a month or so ago (for the first time in a couple of years), and it worked very well. I think it's important to remain professional at all times though - that helps coax swift payment in my experience.

[net-curtains]

Thanks for all the replies, most of which are covering the issues I've been chewing over in my head.

Put up with it as part of business

No sorry, my clients get a top notch service at an excellent price. I'm not putting up with late payment and I'm not putting up with additional wasted time spent chasing them up for it.

A company who will pay 90 days after an invoice is due is not a client I would be worried about losing.

I think that's hit the nail on the head.

If I have to spend extra time chasing a particular client for payment then I have two options: charge them more (either late payment fees or add more to future quotes for extra time spent chasing payments), or what I normally do - dump them as clients. I don't need the hassle. I'm not short of jobs due to good work and low prices, so if they don't appreciate this then they can mess the local cowboys around instead.

As for PDF-only invoices, again, I know all the green-wash which can support it but it looks cheap no matter how well the PDF is designed. We used to do all our quotes (rather than invoices) as PDFs but as an experiment started following them up with a hard copy in the post and over a period of six months we saw an 18% increase in the take-up of quotes - nothing else had changed other than sending a paper copy. I asked Sam to design a nice looking wallet-folder thing for them and all quotes are now sent same day by PDF for that instant response but also by post. Time and time again we've got jobs as the hard copy has made us stand out above the competition and in most cases we've been far from the cheapest but perception of quality has been higher than if we had e-mailed the information only. I know its unfashionable and I'm on my own on this, but PDF-only invoices are lazy.

I can only echo Sarah's point about the eco advantages. Sales are a totally different matter, of course you want your quotes to look good.

To be honest, it would depend on the client and how much it was for. If it's the first time, the client is either new or well liked, it's for a large sum etc. then we'd send a paper invoice if they requested one. However knowing / assuming that they're just using this as a method to delay payment even further to net-curtains, and that they had no issue with paying the first invoice then I don't see why they should suddenly require one, not when they can just print an invoice off.

This is the thing. They didn't have a problem paying the deposit invoice via .pdf, but now the sites live there suddenly seems to be an issue with this method and they're delaying the remaining payment.

Thanks for the replies again everyone. I think for now I won't mention the late payment bit, I'm just going to query why they need a printed version personally sent when they can print out a copy from the .pdf, but I'm not sending a printed version, unless they want to pay for it.

There is another potential job to be had, but after this I think I'll either decline or add a bit to their quote for the additional hassles involved.

[Charisma Bypass]

It's like being in Tenerife.  You get all the really hot chicks outside the pubs with the free drinks leaflets (think lovely wallet for quoting/proposal), then some tattooed old bint (PDF invoice) behind the bar .In other words, once you are in, you're getting a different view of the whole shebang.

It's a shame that anyone still sends paper invoices.  Won't anyone think of the trees?

[Haze]

I send both paper and pdf versions, but I do prefer to go down the pdf route. It's just the right way to go, paperless billing!!

How about adding something to your quotes/t&c which states that paper invoicing is not a favoured option of billing but can be provided for a nominal fee. I may start to do this myself.

I am owed £300 or thereabouts by one client since January, and there's the 30 day payment splurge on the invoice. But no one takes any blooming notice, but he does eventually pay. The only thing I wonder is whether he would put up with treatment form his own clients... But he's the chap now using the SEO services I've mentioned elsewhere in the forum. And he's prepared to pay them £50 a month with their £300 set up fee, it really gets my dander up, but have to bite my tongue, for the moment anyway.

[Mike@TheWhippinpost]

I'd rather have a plain text email than a PDF.

[Ben]

I find companies that produce paper invoices to be old-school, and not to be trusted

[civ]

This is the thing. They didn't have a problem paying the deposit invoice via .pdf, but now the sites live there suddenly seems to be an issue with this method and they're delaying the remaining payment.

Could be a lesson there about not putting the site live until the balance is paid off in future. I've found clients much more keen to pay when I point out that part of the contract they've signed

[net-curtains]

This is the thing. They didn't have a problem paying the deposit invoice via .pdf, but now the sites live there suddenly seems to be an issue with this method and they're delaying the remaining payment.

Could be a lesson there about not putting the site live until the balance is paid off in future. I've found clients much more keen to pay when I point out that part of the contract they've signed

I normally do that, but it can become a bit of a grey area.

Our usual arrangement is pay deposit, initial consultations and design, website build, add content, training session/tweak content, pay balance/go live, submit to search engines/promotion.

But quite often clients can't (or won't) make time for the training/finalising content bit and put that off until after the site has gone live. I argue against this but they'll mention some expensive ad they've put in a mag, or some exhibition they're booked to appear at and this is set as the 'live' date. They'll then haggle over paying the balance as the site 'isn't finished yet'. I know this is nonsense and they should pay the balance before making the site live, but it can get a bit messy when they don't stick to the schedule. They pay up eventually, but then there's the added hassle of clients using the training/tweaking session 6 months later (that should have happened before the site went live) as an opportunity to completely revamp the existing content and site structure.

We've got quite a few sites sitting here now, waiting for content, between 6 months and 5 years old.

Schedule? What schedule?

[Ben]

But quite often clients can't (or won't) make time for the training/finalising content bit and put that off until after the site has gone live. I argue against this but they'll mention some expensive ad they've put in a mag, or some exhibition they're booked to appear at and this is set as the 'live' date. They'll then haggle over paying the balance as the site 'isn't finished yet'.

I fell into this exact trap when I started, but it's one of the few things that I'm now very straight about - you haven't paid, the site doesn't go live. I've had instances when the site "has" to go live and wasn't finished, and I've explained that they now have 14 days to pay the full amount, or I'll 'hide' the website. Only actually had to do it once... amazing how quickly some people can get to the bank to do a transfer after a month of asking

Similarly, I never have websites sitting waiting for content - I'll email you three times, usually over the course of two weeks - if I don't have any reply in 21 days, I mark the project as "dormant" and send a registered letter and invoice stating this and request payment for the completed so far. Has worked for me on the few occasions it has been required.

[sarahA]

We pretty much do the same as Ben. We tend to charge in 3 payments (for major sites, else 2 for smaller sums), deposit, 2nd payment when design is agreed on and then that leaves usually 30% for final payment which must be paid within 14 days of the site going live, or alternatively, if all work stops on the project due to the client's fault we'll charge for any outstanding costs and then reschedule the work in when the client is ready to continue again. This gets out of them delaying for 2 weeks and then coming along when you're in the middle of another project.

They were added in because of experiences in the past. Luckily we've not had that situation in recent years, although a lot of our work is repeat business so we know most of our clients quite well