Need a bit of advice from you seasoned Debt Collectors...

[kiwigtx]

...or anyone running a business having trouble getting money out of customers.
I manage a wholesale outlet, and I consistently have 2-3 customers who never get out of the 2-3 month outstanding balance cycle.
Has anyone got any good tips that actually work? Or a few ideas to try out.

I was talking to my buddy MowPar just a minute ago. Mowpar said he had a customer once who was so tight with money, he reckons you couldn't drive a rye grass seed up the guy's a$$ with a 14lb sledge hammer.

Any and all advice welcome. I am getting tired of one guy in particular flying off the handle when I bring up his overdue status. And yet at other times he happily brags about how much work he has, the upcoming buying trip to the States to pickup new Corvettes and Trucks, and how much money he made....blah blah blah.... :icon_rolleyes:

Thanks in advance :notworthy:

 

[Chargerjase]

Hi Roger,

I used to run my own business and had the same issues you are describing. It boils down to how strong you are and if these people are valuable to your business. I used to shuffle around and try to accommodate people until I realized that these people were actually taking advantage of me. Once you get to that stage, then you can be firm and lean on them. You need to have the attitude that if they get pissed off with you because you are asking them for your money, that you are better off without them............after you get paid of course. Its refreshing to get rid of dead wood, trust me.
Good luck mate.

 

[hunt2elk]

If I ever have to make a call to a customer because their bill with me is unpaid at the 30 day mark, I charge them 1.5% interest for the month. When they call back at a future date, I explain to them that I expect to get paid in a timely matter and will only work for them if they pay me on the day I have completed a job for them. I never have a problem with them after that.

 

[YY1]

I have two tenants that are habitually late.

Totally different situations though.

Tenant A is currently 2 months behind. This person communicates regularly, and has been caught up several times, although they tend to run one month behind. If they say they will make a payment in a week, they do.

Tenant B is currently 3 months behind, they typically only communicate if I send written notices threatening to auction their property. They have been 5 months behind, but have also been current. Three times they have promised to be caught up by the middle of the next month, but never followed through.

I have changed my rental agreement to reflect a progressive increase in price (Florida does not allow late fees unless they are part of the "rent"- which is somewhat difficult to interpret) $10 additional cost after the 10th of the month, $20 after the 20th. (rent due on 1st). With all past due charged at max rate. This is an incentive to pay on time, and also covers late notice mailings and additional trips to the post office and bank.

The bottom line, however, is that both these situations are what I believe is called "slow pay".

I know tenant A pays regularly, I could evict them, but would lose that money, even if I am currently a few dollars short.
If there were potential tenants knocking on the door every day, it might be a different story.

Tenant B is about to get a lien sale notice once again. They will likely pay up eventually, but the weight of my frustration is shifting towards not wanting to deal with them, even if it means loss of income until another tenant signs on.

 

[steve from staten island]

The answer to your question depends on several factors. Are you loosing money because of this customer's late payments? Is this customer a major factor for your business,in other words do you need him? If i bought what ever it is your selling and it was a sizable order and you knew i was good for the money,but i told you i need a minimum of 60 days to ninety to pay. How much would you add on to the bill to make it worth while for you to wait. Myself if i was doing good and making money and the guy did always eventually pay,id probably just jack up the bill. But never let a customer get to far in what he owes you when you know there late payers. Ive seen guys go under because of one outstanding big bill that was not paid

 

[Richard Cranium]

This might work......

https://www.youtube.com/watch?v=3FztNNH9_vI

 

[1969CoronetR/T]

I have been collecting and paying (CFO) invoices for twenty years for my company that I am a part owner. I usually let the troublesome customer get ninety days in aging (60 days past due) three times and then they are put on COD or credit card sales permanently. I would advise not to use a collection agency unless the debtor refuses to co-operate as this will only anger or alienate them and slow the payment process. Ask them to pay something per week to slowly chip away at the balance. This has worked for me and then I never sell them on open terms again. Unless your profit margin is very high, say 40% or more, it is not worth the aggravation and lost time for a profit margin below 30%.

 

[69Bee]

When I do a job, I get parts money up front. Gives them an investment in the job, and incentive to come pick it up when it is done.

You sound like a parts business, so I would charge 1.5% late charge every month after 30 days late.

Bill due in 30 days, 30 days late+1.5%, 60 days late+1.5%, etc..

If they are habitually taking advantage of you, cancel their account. Some people think that the rules don't apply to them, and that they can do whatever they wish.

 

[NJRR]

In my business, invoices over 30 days incur a 1.5% late fee per month. Depending on the customer, I will cut off their credit if they don't get current. I never let anyone maintain credit privileges if they are over 90 days.

With my tenants, if they are late after the 5th of the month, they incur a $75 late fee. After the 15th, it goes up to $150. If they don't pay by the end of the month, I initiate eviction proceedings. In order for them to stay, they must pay all arrears, PLUS court and attorney fees. And this is in a state and county that is totally biased towards tenants rights and sees us landlords as bloodsuckers. It takes 3-4 months to evict a tenant for non-payment of rent.

 

[kiwigtx]

All good advice guys...thanks. One guy in particular has been a customer for 25 years or so - maybe he is in that mind-set that he can do what he wants. I'll be seeing him in a couple of hours ad I will tackle him over his account....20th is only hours away

I would like to try Dickie's method, but it might damage the paint work.

 

[Dennis H]

I am not a business owner. I do know that consequences effect change (in behavior).

 

[bm02tj]

Every customer is different and I have two that are cash first and will refund what is left and a couple that I add extra in total then offer a discount for early payment and some I write on the invoice 2% charged per month after 30 days
but you need to be careful you may not get payed at all

 

[Chargerjase]

People who don't own a business have a completely different mindset than the people who don't. Business owner: I might not be able to make my next payment on the materials I purchased for my customer because he has not paid me. That will affect my credit with my supplier. Customer: He owns a business. He is rich. He won't even notice I am a few weeks late.
It sucks, but true. Don't be afraid to ask for your money Roger. If he has been with you 25 years, then he should know better. He is actually hurting you financially and damaging your relationship.

 

[snakeoil24]

The 80/20 rule never changes. You will do 80 percent of your business with 20 percent of your customers. Offer him a trade discount of 1 to 2 percent if he pays in ten days. Smart business people live this. 1 % is the same as earning 12 percent on your money, 2 percent is like 22 percent. Braggers are a dime a dozen. Anyone who braggs about how many cars they own to vendors usually is a sign they have money trouble. Don't worry if he gets m,ad at you for asking to get paid! Makes ure you do two things well.

1. Sell
2. Get Paid.

Be relentless about this. if he doesn't pay he is not a customer!

 

[Bruzilla]

First, you hire a large Italian man named Guido.

Second, send Guido out to encourage them to pay their bills on time.

 

[MarPar]

I own my business, and this has worked for me...



my terms are 7 days (perishables). some pay in 14 days; but they get the old "42." ink banana:

 

[kiwigtx]

That's what I wanna do a lot ^^^^ :headbang:

 

[slepr1]

When I owned my own business I would always take advantage of early payment discounts. I always paid by credit card when possible to get cash back dividends. My suppliers were hesitant on accepting credit cards but found they could sell more...with less collection headaches...and they get paid right away. The 1.6% credit card charge is well worth the aggravation to the seller and the credit card points or cash back is good for the customer.

 

[1969CoronetR/T]

My merchant service fee is 2.4% on average for American Express, Visa, Master Card and Discover. I started charging 2.5% to all credit card sales last month and most customers dropped their card and to send in a check. I offered a 2% N-10 day terms to offset the inconvenience of using a credit card. I have the early pay discount with a majority of my vendors and would be a fool not to take advantage of it with the interest rates being so low.

 

[Meep-Meep]

I have a few customers that are in that loop and I'll be the first to admit that I don't pay as much attention to this as I should. I also give people a lot of slack because of my work load it's difficult to be timely in getting the work done. But our work is good so not a terrible trade off.

Recently a very large company sent in a small system for repair and for whatever reason this bill went unpaid for about a year. I bug them now and then and still nothing. They seem to like my work and sent in another system for repair but I am not rushing to get it done. When the customer called to get an update on when it will ship I politely unloaded on them saying I'd be more inclined to finish it after that year old invoice get's paid. A check showed up in about 30 days. Point is you need some leverage but wait to exercise it until they need something from you. If you start right away with telling them off they will not send you any future "leverage" so to speak. Not sure what leverage you can impose on the party in question but if he goes to you surely you can do something. I have found that people who behave this way are typically bottom feeders in the industry and will try to get away with stretching out the NET 30 into whatever or never. Best to stay away once you squared your books with them or decided the loss is easy to absorb.

Another funny story. Another company in the same building had a run in with an unpaid invoice, and when his customer sent in a second item for repair, then asked about the status, they were reminded about the past due invoice. Still no pay on the old invoice but demanding they get their item back, the guy issued a very well composed, polite sort of FU toned letter saying that (paraphrasing here) "due to our negligence we seem to have lost your controller but will issue a credit for this current repair." The customer wasn't happy and threatened with some action. I don't recall the details but that letter basically said "we lost your controller, but can be persuaded to do an extensive search of the building with the arrival of a check." And when the check showed up another letter went out saying "with renewed vigor we conducted another search of the premises and found your controller and will ship it immediately."

A they say in the movies - good luck, Jim.