How can I get paid more promptly?
Hi Community ~
I have a client who is a notoriously late payer, always with a "good excuse." The challenge is, I work with the CEO of a startup that is part of a much larger entity, and the CFO for the parent company pays all company employees and independent contractors. I've spoken with him, I've emailed him, and my client has interceded on my behalf. The situation will improve for a few months, then fall back. This is a long-term contract, a gig I really enjoy, and I invoice for the same dollar amount every month on the same day. You'd think the CFO could simply put my business in rotation for payment.
What else can I try? I don't want to fire the client, as the client is wonderful; it's the parent company CFO that's the bottleneck.
There's a message here. If you were really that important to this customer, they wouldn't risk losing you and would pay you promptly.
I'm betting the IRS doesn't get the same run-around.
1. Offering a discount is one method, but it is highly problematic because most accounts payable departments will take the discount even when they are late.
2. Late fees and all terms and conditions need to be placed in your contract. It is not adversarial; it's just business and it is the only way you can get these fees if you end up having to go to court.
3. If you are having these issues, raise the fees of our services to compensate for having to wait and the time and effort it takes to collect the money due.
4. I would recommend retainer for sure, but half of the retainer to be paid up front to begin any work. Then the balance of the retainer due before the 1st of each month. If you don't receive payment by then, then notify them that you are stopping all work until the retainer for the month is paid.
5. Keep this in mind. YOU ARE NOT YOUR CLIENT'S BANK! You'll need to remind them of that. You have to remind yourself of that as well.
Offer better discount terms...Like 2% 10 net 30 or 1% 10th prox and see if the CFO bites...If not go to sponsor on the account and ask them to help you get your money more quickly...
I've recently had clients pay by direct deposit in many cases and funds are available in my account within 24 hours. Ones who pay that way are always solid and on time. I've had lots of "the check is in the mail" stories from clients who pay late or are inconsistent.
It may not be a large contract but I've found I've wasted the most time getting payments for minimal invoices and those are the ones that are the most aggravating of all.
What about setting the client up on an auto- draft each month? This is an assurance of payment and less hassle for your client.
I would consider having a contract written up that stipulates that you get paid the amount owed every month by a certain date, and try to get the CFO to sign it. Once you have something in writing, I think the CFO might take it more seriously so as not to risk potential litigation. I would also approach it in a very friendly matter, and maybe even find a way to also have there be specific deadlines in it that you have to adhere to, so that it doesn't seem one-sided, and you can pitch it as being something that protects both of you.
you have to decide
either this account is important enough that you can put up with this behaviour
or not...if not find the weak spot such as
do other suppliers get the same treatment-let him know you know
office politics-let the word get around so he looses face. cfo's are always on the lookout for a better job this could hurt him.
start delivering whatever you do aslo late with "the same good excuses" let the client put internal pressure
I would recommend keeping a deposit or retainer on file in the form of a time block, or other "prepaid" service. With the payment history, you have the justification in that their credit record is not established at this point to support billing in arrears. When the account on file reaches a minimum balance, you can request that it be replenished.
This way, instead of continually running after funds, you have an established credit policy, funds on file, and can forward time or service statements instead of payment requests.
Payment policy is always a negotiated piece of a contract, and a very important one. If a client is habitually late in paying, you have the power as the vendor to change the terms. On the other side of this coin, you have to be prepared if they say no or source an alternate vendor (who can then be the one to continuously chase after payments, while you find a more qualified client).
Send the invoice a couple weeks earlier and expect it on time. Set consequences if they are significantly late and stick to them. Reasonable ones that make sense and get them to realize they need to pay on time.
i think you need to sign a contrat and if its done already stick to the terms of the contract strickly