Chasing Unpaid Invoices

[ImagineerTom]

Business is business - if people owe you money; chase them for it. If they resent you / blacklist you for asking them to pay MONEY THEY OWE YOU comfortably AFTER its due date then you really don't want to be working for them as they clearly don't actually give a damn about you and are only interested in themselves. If they are extending credit to their customers then (as part of being a business) they must make sure they have the means to pay their suppliers (you) regardless of when their customer pays - that's essentially what the business of being a lead contractor / project management is all about.

 

An odd client who normally pays on time being late on one invoice you can take a pragmatic view on but your starting statement was that you have a regular problem with companies paying you late. You need to get on top of your billing process and start taking a harder line now because if you don't YOU are going to pay the price.

[Jivemaster]

 

Don't confuse this thread with my other. Just because people aren't paying me on time, it doesn't mean I won't pay others on time, does it?

 

No confusion. I know a DJ agent who had a very bad two years after one party planner took two years to pay for the DJs one Christmas. He paid the DJs then took the hit for two years. If you send out freelancers can you afford to take that hit?

[kerry davies]

TC, can you guess from the responses so far which sector of the industry gets stiffed more than any other? Clue?

Imagineer Tom is from a tent family.

 

The problem of non-payment is endemic and gets worse when the chancers see an opportunity for a quick buck in economic downturns. It isn't just our industry sector it happens everywhere. Though without proper T's & C's agreed in advance you are on a loser.

 

Following the polite letter and phone call asking for an explanation I used to write formally with a deadline and that deadline never shifted. It was the moment at which I opened the laptop and went to Money Claim Online. It can upset people, not least because it is recorded against the company, but I have never been "blacklisted". One "victim" still sends me Christmas Cards even though it cost them extra to settle a bill. They paid the next promptly.

 

Jive and Tom may sound harsh but it is too easy to move from exploited to exploiter and good habits like paying the crew on time and reasonably make for a longer and far happier career. They also tend to go home with a lot less of your kit! ;)

[top-cat]

TC, can you guess from the responses so far which sector of the industry gets stiffed more than any other? Clue?

Imagineer Tom is from a tent family.

 

The problem of non-payment is endemic and gets worse when the chancers see an opportunity for a quick buck in economic downturns. It isn't just our industry sector it happens everywhere. Though without proper T's & C's agreed in advance you are on a loser.

 

Following the polite letter and phone call asking for an explanation I used to write formally with a deadline and that deadline never shifted. It was the moment at which I opened the laptop and went to Money Claim Online. It can upset people, not least because it is recorded against the company, but I have never been "blacklisted". One "victim" still sends me Christmas Cards even though it cost them extra to settle a bill. They paid the next promptly.

 

I am not trying to say your advice is wrong, I am just saying that despite being the one asking for experience I still maintain that you need to treat each case individually. If you think somebody will be of benefit to you in the future, it is less advisable to go all Godfather on them than if it is somebody who you'd not wee on if they were on fire. Taking people through the small claims court will never make you friends so personally I'm never going to take that route with anybody I want to actually work for again.

 

And sorry but you will not convince me that a late payment is a reason to never work for someone again. Yes there are some companies who dissolve themselves and then pop up elsewhere, but not everyone is like that. Discretion is key.

 

Jive and Tom may sound harsh but it is too easy to move from exploited to exploiter and good habits like paying the crew on time and reasonably make for a longer and far happier career. They also tend to go home with a lot less of your kit! ;)

 

No seriously, I've said it once, and I'll say it again. I play by the rules, and I'm not easily led astray by people who don't.

 

I would appreciate it if my integrity wasn't questioned again, thanks.

 

Don't confuse this thread with my other. Just because people aren't paying me on time, it doesn't mean I won't pay others on time, does it?

 

No confusion. I know a DJ agent who had a very bad two years after one party planner took two years to pay for the DJs one Christmas. He paid the DJs then took the hit for two years. If you send out freelancers can you afford to take that hit?

 

Just because I am looking for freelancers in one thread, and acting as a freelancer in another, it doesn't mean that freelancers I employ are paid from money which I invoice for.

 

In reality I do resident gigs at a number of venues and as their lead technician I am responsible for booking additional technicians. The invoices are supplied to the venues directly and I am not in the pay chain. Maybe I could make more money if I was, but I'm not, for that very reason.

[Jivemaster]

The invoices are supplied to the venues directly and I am not in the pay chain. Maybe I could make more money if I was, but I'm not, for that very reason.

 

Perhaps a good move.

[top-cat]

The invoices are supplied to the venues directly and I am not in the pay chain. Maybe I could make more money if I was, but I'm not, for that very reason.

 

Perhaps a good move.

 

I think so, because if it all goes T-U, I'm out of the firing line.

 

It's also because a number of the people I use I would consider as 'friends' and I never want awkward financial situations to come between me and my friends.

[ImagineerTom]

Then I'm confused as to what the point of this thread is - you start it by saying you've got a problem with persistent non-payers and asking what everyone else would do.... then in every response you've told people their methods aren't right and have said that you have a fundamental problem with chasing anyone for money they owe you. Others (with considerably more experience than you as you admit you're a relative newcomer) have told you that the most important advice in business IS to take a hard line and very actively pursue people who owe you money and again you've largely dismissed this advice.

 

If people owe you money you have to ask them for it, if they don't give it to you then you have to ask them more firmly and ultimately get the courts involved. There's no other route to resolution and business's that don't keep on top of the money they're owed very quickly go bust themselves.

 

I think so, because if it all goes T-U, I'm out of the firing line.

Don't be so sure - legally (and for tax purposes) the person who is the "employer" or the one who enters in to the legally binding contract (and thus has legal culpability when it goes wrong) is not necessarily the same as the entity named on the invoice. If HMRC/Police/H&S decide that you are the person in charge or responsible (by looking at what you actually do rather than the paper trail) then legally you are. If you are organising crews, booking them, telling them what to do on the day and are generally considered by the venue or your client as being "in charge" then legally... you are.

[top-cat]

Then I'm confused as to what the point of this thread is - you start it by saying you've got a problem with persistent non-payers and asking what everyone else would do.... then in every response you've told people their methods aren't right and have said that you have a fundamental problem with chasing anyone for money they owe you. Others (with considerably more experience than you as you admit you're a relative newcomer) have told you that the most important advice in business IS to take a hard line and very actively pursue people who owe you money and again you've largely dismissed this advice.

 

If people owe you money you have to ask them for it, if they don't give it to you then you have to ask them more firmly and ultimately get the courts involved. There's no other route to resolution and business's that don't keep on top of the money they're owed very quickly go bust themselves.

 

 

No I haven't 'largely dismissed this advice' - I've said that I'd rather show discretion with some clients.

 

I just don't wish to go kicking down every door going all mafia on people with the assumption that they will dissolve and come back under a new name. I didn't come here looking for a textbook answer, I came here looking for genuine experiences for when dealing with people who you may want to remain clients when it comes to getting unpaid invoices settled.

 

If an overdue invoice is all it takes for you to sever all contact, fine. That's your system. But I don't want it to be mine. Deal with it, or find somebody else to go preaching to. I have stated that I don't wish to go about it that way, and all you seem to want to do is tell me how you are right and I am wrong.

 

If you read my OP again you will see there are two scenarios, the former being that I want to remain on good terms with them. If you say "cut all ties, get your money, and don't do anything for them again" you have categorically supplied a bad answer because that is not the end-game picture that I am looking for. It works fine for the latter question, and I've already agreed with that. But there are many ways to skin a cat, you've made yours clear, and I appreciate that, but there are others and I am interested to hear those too.

[ImagineerTom]

But as I (and others have pointed out) going in "hard" (or going in "like a business" to other business's) when they owe you DOESN'T automatically loose you employers as you seem to fear. When you forget to pay your business rates someone from the council contacts you and says "oi, you're overdue, you'd better pay now otherwise we're going to court", when you forget to pay your electricity bill / phone bill / internet bill someone from those companies contact your business and says "oi, you're overdue, you'd better pay now or we're going to cut you off" - going in "hard" is how business works; its the language other business's understand (especially their account departments) and is a tried and tested way to get the money you're owed. It's normal, standard business accounting "best" practice to avoid paying any bill until the last possible moment and frankly any company that is delaying paying its subcontractors will be getting plenty of properly angry threats from people they owe money to so you asking them within a normal, professional business framework to settle the debts that are now overdue to you is not going to be the unusal and shocking conversation you're fearing it is. If you can't separate the personal from the business then you should be looking at employing someone else to be your book-keeper/accounts person who does the invoicing and chasing for you; someone who has the experience dealing with "business" and who can go in hard and remind companies of their legal obligations when they start taking the P out of you by flaunting them at your expense. This also means that you can continue to have a friendly/matey dialogue with these companies with the strict accounts being person always remaining at enough distance you can disavow their actions if you want to keep a troublesome customer.

 

I (and others) have said quite clearly that an odd overdue invoice isn't grounds to cut all ties with a company but if people are regularly late paying you and/or if they're regularly giving the (actually complete nonsense) excuses for late payment that you've mentioned then it suggests that they either don't care about you as much as you care about them and/or they have sucky business practises. It's these sorts of companies that ARE the ones who end up going bust owing little contractors thousands of pounds... owing YOU thousands of pounds.

 

How do you deal with companies you want to stay friends with - threaten them with legal action for overdue payment twice then take them to court.

How do you deal with companies who you don't care about future business relations with - threaten them with legal action once then take them to court.

[GR1]

My answer to top-cat's 2 questions are:

 

For those clients you don't want to work with in the future use the Small Claims Court. It is cheap and it works. Usually your cheque will mysteriously 'cross in the post' with the claim from the court which will mean you end up paying the court fee but get the rest in your bank.

 

For those clients you think you want to work with again - take a reality check. Why would you want to work with people who want to steal from you? They might be lovely people, the girls in the office might wear short skirts, the kit might be shiny and new but if they consistantly don't pay you have to understand that they are stealing from you and you must make timely settlement of invoices right at the top of the list of criteria by which you pick your rosta of clients.

 

Moderation:

Unnecessary comment removed.

 

Finally if you continue to allow people to pay you late, when it comes your time to book other self employed crew and pay them yourself you will pass the slack attitude on and start paying them late on the basis that I did it so they can too. I've seen it happen before and I don't want that mindset to get into your head.

 

If any of this sounds hard headed, it is. You have to be because there are nasty people out there who will only respect you if you treat them firmly and will tread all over you if you don't.

 

You have to be firm but fair. Fair treatment of you is when you gate paid within 30 days without sending reminders.

[musht]

For the hard of paying who you don`t want to see again, letter before action followed by actual action, directly after given period. Small claims procedure is designed for use by civilians.

 

For those using you as low cost credit, that you are prepared to wear, upset your charges to them by an amount and offer a discount for prompt payment.

 

Excuses like `waiting for bank run` are in the same book that starts with `the cheques in the post`, would make discreet inquiries if many others appear to be awaiting payment.

 

Introduction of a third party may help, a hard nosed friend or relative representing your `accountants` on the phone just needing to settle this months books.

 

Like Kerry said , make a payment policy and stick to it.

[top-cat]

Moderation:

response to removed unnecessary comment removed as it no longer made sense

[Funky Dave]

I agree with Tom on this one. You have to be firm. Business is business. No-one said anything about sending the mob round. Legal action is how business is done. It's to be expected that a business will seek legal action if they are not paid. When I forgot to pay a supplier, they sent me a formal letter (not even a polite phone call) and I paid them immediately and there were no hard feelings from me. The letter may possibly have been computer generated as soon as the payment was overdue. I felt that I should pay them immediately in order that I keep my good relationship with them. We still do regular business. If they say they are going to pay you and then don't pay when they said they would, then you need to be firm with them. Remember business is business, it's standard procedure. If you don't follow the standard procedure then they will remember you as the guy that doesn't need to be paid on time and next time they are in a spot of cash flow difficulty and they can't afford to pay everyone, then it will be you again that doesn't get paid. I think that if someone owes you money and payment is overdue, they have no right to be offended if you ask for the money and in a business situation, threatening legal action is how you firmly ask for your money. Threatening legal action doesn't have to be offensive either, it can be done in a diplomatic way. There are plenty of template letters that you can modify for your needs. Just remember that a LTD company is a corporate entity and not a human being. Corporate disputes are sorted out in the Court room. Corporations don't have emotions and don't get offended.

[top-cat]

Well in response to this thread which I started a while ago now, probably the most useful thing I found (which seems to have done it in all but 1 case that I've chased up) is the Late Payment of Commercial Debts (Interest) Act 1998 - and the facts that:

 

a) 30 day payment terms do not have to be agreed on paper, if there is no agreement then 30 days is the default.

b) You can charge interest from day 31, again without any contractual agreement, at a rate of 8% above base.

c) You can charge a late payment fee from day 31, again without contractual agreement, at between £40 and £100 depending on the amount owed.

 

I had always gone on the pretence that these things were only valid if you had a contract with the client that agreed such terms, but no, they are written in law.

 

It seems that to the companies who like to hold onto money rather than paying it, hitting them in the pocket is the only thing they understand. And the benefit of interest is, of course, that the longer they hold your money, the more they end up paying you.

 

Sorry to go back to an old thread but I mentioned the above to a few (freelance) friends and they didn't know that either, so I thought it worth sharing.

[Shez]

I was under the impression that that act was only applicable when the debt exists between two businesses? If one party is a freelancer self employed sole trader, is it still legally valid?

 

This is not to say that it may not still be effective in practice of course ;)