RE: FN-FORUM: How to go about complaining to clients that have not paid

date posted 4th May 2007 12:16


Steven Lavine wrote:
> I need some advise. A client of mine, has for the last 3 months,=20
> not paid their invoices correctly. The excuses I have heard from=20
> them range from, 'Oh it was a banking error' to 'Cash flow problems'=20
> (which I actually believe is the case). what is the best way to=20
> handle this? I do not want to lose the client, as they are my main=20
> source of income at the moment.

Hello Steve - welcome to the scourge amongst British SMEs - late payment
culture!

Alain highlights the core issue here - reliance on a single client for =
the
bulk of your income is a bad idea, particularly if they're a poor payer.
Whatever you do, spreading your eggs between several clients is the way =
to
go.

Having said that, there is no point in burning bridges - if the client
provides a good source of income, it wouldn't make sense to issue a "pay =
up
now or else" ultimatum. A better approach would be to chat to their =
MD/CFO
about the late payments problem and let them know you need to charge
statutory Late Payment Interest (currently 1.1% per month) each time an
invoice goes past its due date.

If this is a genuine "cash flow" issue (as opposed to "lack of cash", =
which
is quite different), then this extra expense shouldn't be a problem for =
the
client, but will provide an incentive to improve their payment timings. =
FYI,
Mike A (mikes.dotnet [A] blueyonder.co.uk) is the list expert on the =
topic -
he helped draft the UK Late Payment legislation.

We have an additional technique we use: we found that some clients =
regularly
paid a week or so late on every invoice, which became an annoyance. When =
we
discussed the problem with them, we found they had a company policy not =
to
pay UNTIL the due date, otherwise they were criticised for paying too =
early
during internal audits! Our solution was to modify our invoice due dates =
to
the following:

Payment Due: Within 20 days of invoice date.
Statutory Late Payment Interest (LPI) applies to payments=20
not received within 28 days of invoice date. Thank you.

Hope that helps - good luck,

Ben

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