We've all had them, - the customer who's never in when you go to collect the money,- but here are the steps i've been taught to make sure we get paid for ALL the work that we do.
there are 3 reasons for not paying -can't pay, won't pay and don't know they have to pay
Can't pay = They havn't got the money to pay you.
Solve it by - doing a credit check in advance or asking for a deposit, For a larger project, - Asking directly, - Do you have the funds in place now, or will you need to get a loan?
Won't pay = Are they unhappy with your work, did you not say how much it would be,
Solve it by - Specifying in advance what you will be doing for what money (Assume - makes an Ass out of u and me) Checking all through the work that they are ok with what you have done, - if problems solve them before continuing
Don't know they have to pay = do you state your T & C's when you have to be paid by? - or have you stated at the beginning that you will need paying xxxx amount by yyy date?
Solve it by - being clear from the beginning (on your website?) what you charge, state what is included and what is extra, and when you expect to be paid by - my t's and c's say by the 28th of the month for regular clients, within 2 weeks of invoice date for all other projects
When I started in business, I didn't like talking about the money side of things, - I loved what I did, and was keen to get into peoples gardens, and help them make them better. - Now I make sure my initial conversation has something like " your initial investment will be....." - so that I can judge if they realise what the price is likely to be.
What processes have you got in place, and what do you need to improve on to make sure you get your money promptly?
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Thanks for reminding me Claire that I must must get some t&c's properly written up - I haven't got round to it yet :(.
I am just wondering the next course of action for the one non payer I've got. It's been 6 months, I've sent email reminders and postal reminder enclosing sae. There is no response from her whatsoever, not even to query the invoice or work. What galls me most is that I put plants in for her and she'll be reaping the benefits of those this summer.
And guess what, this person doing very well for herself in the legal profession...
Have you talked to her on the phone?
If not, - it may be that your messages aren't getting through.
maybe a phone call to ask, - Have you received my invoice, and is there a problem with payment. - rather than "why havn't you paid?" - which will immeidiately put her back up.
if it's been 6 months, she may not have realised that she hasn't paid.
Until you have spoken to her, - don't presume she is in the won't pay section.
Bridget Zorn said:
Good discussion Claire.
T&C's are a must for all but the smallest of jobs. Whether one-off hedge pruning or projects that are much larger, and for regular maintenance too, T&C's are always issued.. They state the way you work and expect to be remunerated - amongst a host of other equally important aspects of protecting your business while delivering a high quality result.
Taking the time to email the brief and to update throughout a longer job on a daily basis and a closing review of the work with (final) invoice. It's all there in writing, chances for objection are presented and by default, lapse, and the job moves on until the invoice is issued. Communication.
Credit checks? IMO not really worth it, but asking the right questions at the outset, as you note, and developing a rapport through instinct about what is a 'good' and 'bad' potential customer do all come into play.
Finally - move to a monthly standing order (MSO) wherever possible on regular maintenance. It saves the client time and your business (office) time: presented in the correct way it can be used as an incentive to buy your services and retain you - without a loss to profitability.
Cheers, Eugene
if they stubbornly wont pay then there is a service through teh courts called money claim online. Its the first step before having to go through teh small claims court. You register, and then fill in your claim online. It allows you to claim back thecost of the application and intrest on te outstanding debt at a set %. A letter is sent via the court service, basically outlining why they owe you money and giving then options of paying in full, part if they dispute it, or challenging it.They have a set time to deal with it. It then allows you to set the ball rolling on further action if needs be. I used it for the first time in 10 years a few weeks ago and got a cheque for the outstading amount within a couple of days of the letter being sent. Not saying its for every outstanding debt, but why should a persistant non payer get away with not paying you for your hard work
I have full t and cs on all my quotes that are all written and have been checked out bty trading standards and a solictor. I always ask for a booking deposit on jobs over a £1000.00. I also always ask for an initial payment on teh first day once the goods/skip and first full days work has been done. If they wont open a cheque book then it sets alarm bells ringing.
Probably the most important is your gut reaction. If you dont feel right about teh situation or person at the quote then dont get involved. You may get it wrong sometimes, but so far, apart from the instance above, ive never had a problem.
if you are a member of the FSB take advice from the free legal team
a friend had a guy who wasn't going to pay because of a minor problem with another contractor, my friend called the FSB and called the guy back with a case number about 20 minutes later and told him his solicitors were now dealing with the matter.
The bad payers words were priceless 'woah, woah, lets not be hasty about this' and payment was forthcoming without further delay. without that back up, he was at the clients mercy as to whether he say his money today in 6 months or never.
FSB three letters and £120 a year for a sole trader, not bad :) oh, and £30 registration.
I don't use even half of the available deals and benefits they offer, but i'm happy with the reassurance it gives me.
touch wood i've only really been knocked for piddling little amounts, but i do feel vulnerable some times
I have used their document templates to recover bills and have yet never had to take anyone to court.
T&C's confirm payment terms. If I don't get payment I do a polite e-mail, phone call or text message. One week later they get a second one and then my other half turns up and collects.
Our business means it's always small sums though. If I was doing large scale works with plants/materials I think you have to ask for a deposit!
Gut feeling about your potential clients ability to pay is important ! Trust your instincts.
IMHO, property developers are the worst payers, closely followed by many commercial organisations.
We have all commercial jobs (bar one) on 7 day payment terms, or we impose a late payment charge, per unpaid week, and they also go to the back of the queue.
For residential, it's 10 days, with a late payment charge per week up to 45 days. After 45 days for all non payers it's the debt collection agency who will also add costs and interest. We have used the agency twice, both times for commercial non payers. Using an agency costs us nothing, and avoids all the wailing and gnashing of teeth involved in chasing debt yourself.
Clients who don't pay on time are a business cost in time, admin, and mental energy, and should be made to bear the cost themselves, hence late payment charges. Charges may not necessarily be legally enforceable, but it focuses the clients minds to pay up on time.
T & C's are a must; include a clause that all materials remain your property until paid for! With this one I think she's just ignoring hoping you will give up. I would send her a letter recorded delivery referring to previous correspondence giving her 7 days to pay in full or you will have no choice to take appropriate legal action to recover the debt.
Bridget Zorn said:
Hi There,
I have a man that wont pay the full bill at present.
He had a 10% discountto pay by a certain date. Instead we received an email with several silly moans on that day. He then stated he would not pay for a day and then paid this with the 10% discount.
We responded to the points made and upheld all work had been done if not more.
The survey cajme back from the counncil with several unexpected TPO's. So instead we spent a day deciding what we could do instead. He is classing this a day of no work and will not pay.
having explained that to change the works order and resurvey is all work, but he wont budge.
There was a day of rain where we left the site early but a 9 hours day was then completed actualy takig us over the estimation.
So we formalised this in a legal notice. Did not received a replt, called to try to open communication ad was black balled. Second call was refused.
I am currently writing a letter before action wth a view to money claim online.
Dos anyone have any pointers? We dont have the money for joing the FSB mentioned above at present.
I personally have spent a few years getting over a back injury so have only just gone back to work. Obviously cant afford to be knocked and have to ensure what money is available is there for the court process.
Any advice would be gratefully received
Jess
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