Collecting money.... the worst part of my job

[Gummit]

When I started my business in 2007 my policy was that everyone pays up front regardless of who they are: big companies, small companies, schools, colleges, the NHS, etc, etc, etc.

Very few refused to pay up front, most were quite happy to. I then started accepting credit card payments as a lot of engineers seem to have company credit cards now and it is a lot easier for them to just pay on their card then to get a purchase order approved.

Four years later and my business is financially sound. I can choose to give credit if I wish but I do a credit check first and if I'm not happy then I refuse.

At the end of the day it's your money, so don't be afraid to ask for it. Call them every day if you have to. If they owe x number of suppliers and you're the one calling every day while the others are not then who do you think they will pay first just to shut you up.

 

[Steve Bailey]

Someone in an earlier post mentioned that big companies are among the worst offenders. Here's a sample of payment terms from a Fortune 500 company you'd all recognize.

Your firm is in the final stages of activation for payment in the xxx Corporate payables system. xxx Corporate's standard supplier payment terms equate to a 3.5% discount on day 15, net 120 days. To clarify, xxxCorporatewill deduct an early payment discount (“Discount”) on a daily basis on any approved invoice. The Discount will be applied to the gross amount of each approved invoice and will be calculated by multiplying (i) the number of days prior to the ordinary net payment datethat payment is initiated(the "Discount Date"), by (ii) a daily discount rate of 0.0333% (this equates to a 3.5% discount on day 15, net 120). Please note that if an approved invoice cannot be processed in time for early payment, you will get paid in net 120 days and no Discount will be taken.

Note that I didn't have to offer a discount for prompt payment. XXX Corporate was kind enough to declare their intent to take unto themselves a pro-rated discount schedule without my having to bother with all that arithmetic.

Brings back memories of another job I quoted to a large corporation. Terms were net 90 with a 15% holdback pending final acceptance. Nothing up front. Don't bother submitting invoices to cover the cost of any parts or materials you need to purchase. This is a turnkey project and you'll get at least 85% of your money 90 days after it's running. If we're ever satisfied maybe you'll get the final 15% someday. I quoted that at about 500% of what I thought it would go for.

 

[JeffKiper]

I quoted that at about 500% of what I thought it would go for.

That sound like one of those jobs you pray you don't get and laugh when you do get them.

 

[Steve Bailey]

Yeah Jeff,

I was glad to not get the gig. I've declined to quote a couple of others at the same place.

The other was cut-n-pasted from an email I just got today. I've got a PO from them for up to 8 hours of service to help them upgrade firmware. So there's a chance I'll have to wait until Memorial Day to get paid for work done in January. On the other hand, I just might get 96.5% after two weeks. Which of those extremes turns out to be what happens will determine my future dealings with them. If they pay in 15 days, I can always kick up my hourly rate by a few bucks to cover the discount. Their arrogance pi$$eS me off though, so in the future, I may just tell them to take a hike.

 

[bernie_carlton]

The mechanism noted below (I actually call it 'datebomb' internally) is used on some machines. The customer (no municipalities) have full knowledge of it before signing. On each monthly payment the accounting department releases to them the next month's code. On completion of the contract a 'permanent' code is supplied and the PLC password.

Accounting LOVES it. If the customer hasn't passed word (even though it's in the manual which "we never got' even though it's packaged with the machine) to the floor personnel, they quickly, at the start of the first effective month, get with the program and have little problems after that.

It's an administration decision and I have no problem with it as long as the 'customer has full knowledge' part is fulfilled. The machines won't kill anyone if they don't function. But knowing the benefit of our machines they are losing much more in the few hours a machine may be down (while they frantically get in touch with our accounting) than they gain by delaying a payment. Monthly payments seem to arrive fairly regularly after one incident.

 

[Tom Jenkins]

The mechanism noted below (I actually call it 'datebomb' internally) is used on some machines. The customer (no municipalities) have full knowledge of it before signing.

You know, Bernie, I feel really stupid. In all the years I've kicked around this industry I never thought of, nor have I encountered, advising the customer ahead of time about the "datebomb"! I've always seen them implemented as a covert function, and have resisted them for reasons you an others have stated.

Now that you say it, it seems like such an obvious and elegant solution. How about that!

 

[gas]

Many years ago I sent the sheriff ( had to pay up front) to the plant manager of a local large GE plant. He had to personally sign the summons. Needless to say it caused quite a stir. That very afternoon a buyer hand delivered the check and told me that I would never get anymore business from GE again ....ever!!!
You know, they just kept sending RFQs and I kept getting business and when payments got behind I threatened the buyer with the sheriff again and he paid up, complaining all the time that I was all done with GE.

 

[Steve Bailey]

A buyer for a large company once told me it was almost as difficult to get off their vendor list as to get on it.

 

[curlyandshemp]

POs mean nothing. Everytime we have been stiffed for $$$ we had a PO.

There are two categories of customers who are late paying:

Those that can't pay
Those that will pay

Over the years we have found that those customers who push and fast track to get a job installed as quick as possible are the worst at paying.

We try to ensure that progress payments on jobs equal the labour and parts supplied.

 

[geniusintraining]

Son of a *)&^#%

RANT ON ]

Over 100 emails, 30ish phone calls, 17 months later.... I got my damn money

I will never again take a PO's again unless the customer is close enough that I can go to their shop cut the wires and take it back, or take something of the same value and walk out the door.... never again

They made 6 payments, if you look them up on line they sell 25 mil a year, they had to make 6 &^%&^%@# payments to me?

No wonder 90% of the small business fail, we are step on and taken advantage of

RANT OFF]

But anyway .. glad that one is over, I do get some lip from customers (plctalk members) about this and just wanted to update

 

[JeffKiper]

When did I ever give you lip?

 

[geniusintraining]

When did I ever give you lip?

HA! when did you not.... by the way, hows the weather?

 

[JeffKiper]

Cold and snowy. I had 100 yards of concrete poured today for my driveway. Not to bad of a day.

 

[uptown47]

Glad you got your money GIT.

When I used to work for myself I used to make those sort of customers either 'virtually' pay upfront (i.e. I'd inflate the price and then make them pay 40% on placement of order and another 50% prior to delivery to site - for panels etc). This way you had 90% of the total invoice before delivery and, due to the slightly inflated price, if the other 10% took ages to materialise then you weren't that bothered.

OR... the other way was to just make them settle the full balance before doing any work at all. This was something I had to do with one customer who was a very bad payer. I didn't think they'd be happy working like that but they did it. I think it was because lots of other suppliers just flatly refused to work with them so they didn't have much of a choice!

;-)

 

[johnd_125]

I did some work for a customer a few years back who I knew to be extremely bad about paying. I told them I wanted to be paid when I delivered programs to their facility and tested them. They were fine with that.

However, when I was at their facility, had PLC's and HMI's humming, they said they wouldn't be able to pay me that day.

OK, fine, I said, but when I got done testing, I would leave no programs in any PLC or HMI.

I left their facility that day, and Miracle of Miracles!! They found some money and I left with a check for the full amount...