Getting payment out of companies for work done

[Diydebs]

I do the books for an electrician. He has four or five lads that are subbies. However he struggles getting paid by companies... constantly, but he needs the work. How do you get them to pay on time ?

 

[Midwest]

Hi OP, you have two threads with the same question. I would ask a Mod to close one down.

 

[westward10]

I have reported one.

 

[Midwest]

I have reported one.

Hope it wasn't this one

 

[westward10]

It was actually but before you posted

 

[GMES]

Other thread closed, I was going to close this one just to upset @Midwest but I don't need the Aggro

 

[Midwest]

OP is your electrician's company limited or not?

Just to get the ball rolling!

 

[SparkyChick]

Do a bit of research around invoice factoring.

If you're not familiar with the concept, the basics are you strike a deal with a factoring house (probably not the right name). They go out to finance brokers who effectively pay you and take on the debt. Yes, they take a cut of the invoice, but you get paid the bulk of your money almost immediately and they take on the headache of getting the money from the client.

I wouldn't use it for everyone, but certainly if someone was a pain once, I'd seriously consider factoring all their future invoices.

The only problem is some companies are wise to this and specifically include contractual terms that prevent the assigning of debt to a third party.

A friend of mine provides this service and having spoken with him about it for my own information his company was able to offer me a better deal than I was able to get from my bank. If you'd like to have a chat, PM me your contact details and I'll pass them along.

 

[The Ghost]

First off, do you or your client (the electrician) have a contract? In that contract do you have a "Kill fee" i.e. if the client cancels the contract you agree an amount to be paid, usually staggered to reflect the stage of work you are at. Do you have a late payment structure? i.e. if the client pays late there is an interest charge of (usually) 1.5%. Contact accounts directly, and ensure you are familiar with their payment process. Talk directly to the accounts and keep abreast of late payments and let the client know you are serious about payments on time. The other point about having a contract is that if the client pays late then they have broken the contract, in which case you have a stronger case to escalate the matter at law. Personally I am more than familiar with late payers in the role of chair of a charity and being paid by public bodies who are notorious for late payment. It is a bit of a bind between being diplomatic and not alienating the client and at the same time getting the money to pay wages etc. Can be a bit fraught at times to say the least! However I use a debt collection company and don't waste too much time on collection I just pass it over where appropriate to the debt collection agency.

 

[Midwest]

Are you not allowed to also charge an additional fee for late payment, as a Ltd company?

In any case, if I was after advice about late payments, I would of spoken to my accountant

 

[Octopus]

Unfortunately companies pay when they want to, rather than when you want to.

Is there any pattern to the late payments, ie 30, 45, or 60 days

 

[Gavin John Hyde]

depends on the amount but you do have the option of high court enforcement when you get into the thousands rather than hundreds, the court appointed sheriffs are quite good at getting the money. of course issuing ccj's against the firm pretty much means they wont hire you again.By sounds of it, they aren't the sort of customers you really need. with domestic customer's or landlords not paying then i have friends who have issued county court proceedings and got a charging order on the property, makes remortgaging, selling etc nigh on impossible without there solicitor giving you the money owed. a charging order certainly makes most problem clients wise up!

 

[Diydebs]

Hi OP, you have two threads with the same question. I would ask a Mod to close one down.

Thanks still a learning curve this end

 

[Diydebs]

Do a bit of research around invoice factoring.

If you're not familiar with the concept, the basics are you strike a deal with a factoring house (probably not the right name). They go out to finance brokers who effectively pay you and take on the debt. Yes, they take a cut of the invoice, but you get paid the bulk of your money almost immediately and they take on the headache of getting the money from the client.

I wouldn't use it for everyone, but certainly if someone was a pain once, I'd seriously consider factoring all their future invoices.

The only problem is some companies are wise to this and specifically include contractual terms that prevent the assigning of debt to a third party.

A friend of mine provides this service and having spoken with him about it for my own information his company was able to offer me a better deal than I was able to get from my bank. If you'd like to have a chat, PM me your contact details and I'll pass them along.

Yeah we dismissed the idea of that but may have to resort to it....

 

[Diydebs]

First off, do you or your client (the electrician) have a contract? In that contract do you have a "Kill fee" i.e. if the client cancels the contract you agree an amount to be paid, usually staggered to reflect the stage of work you are at. Do you have a late payment structure? i.e. if the client pays late there is an interest charge of (usually) 1.5%. Contact accounts directly, and ensure you are familiar with their payment process. Talk directly to the accounts and keep abreast of late payments and let the client know you are serious about payments on time. The other point about having a contract is that if the client pays late then they have broken the contract, in which case you have a stronger case to escalate the matter at law. Personally I am more than familiar with late payers in the role of chair of a charity and being paid by public bodies who are notorious for late payment. It is a bit of a bind between being diplomatic and not alienating the client and at the same time getting the money to pay wages etc. Can be a bit fraught at times to say the least! However I use a debt collection company and don't waste too much time on collection I just pass it over where appropriate to the debt collection agency.

Hes been doing it more verbally but clearly this isn't going well.. he does get paid but they drag it out way too much

 

[Diydebs]

Are you not allowed to also charge an additional fee for late payment, as a Ltd company?

In any case, if I was after advice about late payments, I would of spoken to my accountant

He's not a limited company

 

[Diydebs]

Are you not allowed to also charge an additional fee for late payment, as a Ltd company?

In any case, if I was after advice about late payments, I would of spoken to my accountant

He's not a limited company

 

[Diydebs]

OP is your electrician's company limited or not?

Just to get the ball rolling!

No he's not limited company

 

[Diydebs]

OP is your electrician's company limited or not?

Just to get the ball rolling!

No he's not limited company

He's not a limited company

He's not a limited company

Can you charge interest on late payment if he's not a limited company still ?

 

[Spoon]

so he's not a limited company then.....

 

[Diydebs]

so he's not a limited company then.....

Ok ok lol.. im new but I'll get me own back when settled, get ready ,

 

[Midwest]

Ok ok lol.. im new but I'll get me own back when settled, get ready ,

Don't worry Diydebs, it happens to us all. Just click the button once & close the page. Does make for amusement though

 

[Spoon]

Ok ok lol.. im new but I'll get me own back when settled, get ready ,

Look forward to it mate. It's good to have a laugh with people on here.

 

[Risteard]

Late Payment of Commercial Debts legislation applies where the client is a business (regardless whether sole-trader, incorporated or partnership) and not a private individual.

 

[Octopus]

Unfortunately companies pay when they want to, rather than when you want to.

Is there any pattern to the late payments, ie 30, 45, or 60 days

I'll try this question again...............

Unfortunately some companies pay when they want, not when you want .............. if this is the case you either need to build up bigger cash "reserves" in the business account or find prompter payers ............

If he's expecting payment within 7 days, he's barking up the wrong tree IMHO

 

[Deleted member 105166]

Companies that pay outside terms generally fall into three camps.

Camp #1 - those that you give say 28 or 35 days account facility, but because they do a single month end accounts payable run, some invoices "just miss" last month's run and are therefore are circa three weeks overdue by the time they're paid. Normally best to accept this, if they are a regular customer and their month end run happens automatically like clockwork, they represent a very low risk of bad debt.

Camp #2 - those that want ridiculous terms, eg: 90 or 120 days from month end, or simply have no intention of paying until they've been chased multiple times and threatened with legal action. Ensure your T&Cs are tight, if they are a one-off, charge them any overdue penalty/interest as per your T&Cs, or if they are a regular customer, increase your pricing by 20% and offer them a 5% settlement discount, should they opt to pay within x days. As a last resort, to avoid issuing a court summons, a full email history & copy invoice/T&Cs sent to a few senior people (group finance director, UK managing director, etc) found using Linkedin often yields results.

Camp #3 - generally multi site / larger businesses - where you need a purchase order number to get paid, although the person placing the order omitted to tell you this at the time of ordering and you find out once the invoice is well overdue. However if you're patient, you may be able to turn this situation to your advantage, by filling out the long winded supplier application form and becoming an "approved supplier", subsequently receiving more work from other business units as you're now "on the list". This customer then moves from Camp #3 to Camp #1

 

[rolyberkin]

This is a really easy one, but you must be mindful of being really nice and to treat people like they have forgotten, a card machine where you can take payments over the phone is a must!
1. Make clear at estimate or invoice stage what your terms of engagement are, if it is net 30 then don't expect payment before 30 days.
2. On 30 days call the person/company who owes the money with your card machine in your hand, enquire (nicely!) whether they have overlooked the payment? Tell them you have your card machine and can take the payment there and then over the phone, if they fail to pay, inform them that you have extended the company terms by a further seven days to pay but unfortunately it is your policy after this date to pass the debt to an enforcement agency and they will then be responsible for any costs incurred. (Most will pay by card there and then or will phone you back fairly quickly or you will get payment by BACS within seven days).
3. If they have not paid by the date set for payment then hand the debt to a debt collection agency. Business Debt Collection & Recovery Solicitors | Thomas Higgins Limited - https://www.thomashiggins.com/ costs £3 for a letter and the website explains the rest.
My wife used to chase late payments for a surgeon and the card machine "To assist you we can take payment over the phone sir/madam" works 99% of the time!

 

[Diydebs]

I'll try this question again...............

Unfortunately some companies pay when they want, not when you want .............. if this is the case you either need to build up bigger cash "reserves" in the business account or find prompter payers ............

If he's expecting payment within 7 days, he's barking up the wrong tree IMHO

 

[Diydebs]

Apologies re late reply. It's all different some a month, some longer. So is a month a reasonable time to wait ?

 

[Diydebs]

Look forward to it mate. It's good to have a laugh with people on here.

I'm not used to the format but I'll get there. I'm more of a Facebook user

Look forward to it mate. It's good to have a laugh with people on here.

 

[Diydebs]

That's super thanks... his problem is he's too nice for business but he'll get there... I'm busy getting him some terms and conditions to get now rather than ding it all verbally with them holding all the aces

 

[Octopus]

Apologies re late reply. It's all different some a month, some longer. So is a month a reasonable time to wait ?

Yes. Very typical for commercial businesses to pay you.

 

[Risteard]

In the absence of agreed terms the law defaults to 30 days.

 

[rapparee]

We make people wait 30 days from the month end.

There is a payment run once a month and it is set in stone.

Companies that pay outside terms generally fall into three camps.

Camp #1 - those that you give say 28 or 35 days account facility, but because they do a single month end accounts payable run, some invoices "just miss" last month's run and are therefore are circa three weeks overdue by the time they're paid. Normally best to accept this, if they are a regular customer and their month end run happens automatically like clockwork, they represent a very low risk of bad debt.

Camp #2 - those that want ridiculous terms, eg: 90 or 120 days from month end, or simply have no intention of paying until they've been chased multiple times and threatened with legal action. Ensure your T&Cs are tight, if they are a one-off, charge them any overdue penalty/interest as per your T&Cs, or if they are a regular customer, increase your pricing by 20% and offer them a 5% settlement discount, should they opt to pay within x days. As a last resort, to avoid issuing a court summons, a full email history & copy invoice/T&Cs sent to a few senior people (group finance director, UK managing director, etc) found using Linkedin often yields results.

Camp #3 - generally multi site / larger businesses - where you need a purchase order number to get paid, although the person placing the order omitted to tell you this at the time of ordering and you find out once the invoice is well overdue. However if you're patient, you may be able to turn this situation to your advantage, by filling out the long winded supplier application form and becoming an "approved supplier", subsequently receiving more work from other business units as you're now "on the list". This customer then moves from Camp #3 to Camp #1

Have you dealt with us in the past?

We make people wait 30 days from the month end.

There is a payment run once a month and it is set in stone.

We also have approved suppliers who sometimes go out of their way and get me non stock items with their obvious mark ups, because I am restricted to just a few suppliers.

 

[JK-Electrical]

I do the books for an electrician. He has four or five lads that are subbies. However he struggles getting paid by companies... constantly, but he needs the work. How do you get them to pay on time ?

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