Collecting money....

[Pat Whatley]

I've got a large national company I do two jobs a year for.....20 3'x10' banners each time.

There last invoice, due March 1, is still outstanding. Last week I started calling their accounting department leaving messages. Today I called from the fax line, turned on the speaker phone, and just stat on hold "for the next available representative" for TWO AND A HALF HOURS.

Somebody actually finally picked up and I almost hurt myself jumping over the table to grab the phone. I told her about the invoice, the due date, the purchase order and the number of times I've had to call.

She looked it up, found where it was approved and in the system to be "paid when it's due" plus two weeks. I asked her what she was talking about, that it was due March 1 so even if they were paying two weeks late I should have had a check months ago. Her quote to me was "No, your account pays in 90 days, plus the two week hold we have right now"

I asked "What about the due date on the invoice?" Her reply was "What about it?"

I finally got her to connect me to her supervisor, a really nice guy....who basically acted like he couldn't understand why I wasn't finding them telling me I'd have a check in two week unacceptable. He actually dropped a "slow economy, we've all got to have a little patience and work together" line of crap on me.

I told him that was great, I'd appreciate them working with me and getting me a damn check, he just replied with a cheerful "you'll have it in two weeks!"

Realizing that I was talking to a wall all I could do what hang up.

Tonight I'm rewriting my account application. EVERYONE except for government agencies is now going to have to secure their account with either a credit card or a bank draft.

 

[stickermonkey]

I did that 3 years ago. Only a select FEW companies get any sort of terms with me. Ya gotta do what ya gotta do. Next time they order, all you do is say, I'll draw up the order paperwork and send it to you along with our Credit Card Authorization form. Fill that in and fax it back to us, and I'll process your order and put it in our production schedule, it'll be ready for pick up on (give date) and VOILA...no problem. And if they ask why...give them the "economy" schpeal they gave you. Works for me...I don't even do a stitch of work for most orders until I have something in my bank account. Rarely anyhow.

I've had this same sort of thing happen to me with a large "project management" firm working with the government. It took them NO LESS than 7 months to pay me. Needless to say...I'm not going to fall for that crap again. I don't have the kind of cash flow needed to pay contractors and supplies upfront all the time...and 7 months is unacceptable!! PERIOD!

Hope you get your money

Kyla

 

["Deposit Please"]

That's the prob dealing with big corporations, that's normal. They don't care what your invoice says. 60 or 90 days is about right, just continue to work & your check will be mailed to you before you know it. Just make sure someone in the office is keeping track of outstanding payments. I always factor in the transaction fee in my final cost, just in case they take that payment route, that way, it's always covered.

 

[Pat Whatley]

...just continue to work & your check will be mailed to you before you know it.

Man, I'm sitting on $18,400 worth of 60 day past due invoices and haven't gotten a payment on a late invoice in almost three weeks. Sorry, I'm not sitting around hoping there getting paid one day....I think three months was MORE than patient.

 

[Gino]

I'm not sure how this works, but if you offer a discount say of 2% if paid within 10 days..... some companies by law must take advantage of any or all discounts available to them or they are liable for some kind of unlawful use of funds.

It was explained that if a company does not take advantage of such discounts, they are misusing the companies monies and can be jailed for such an act.

Whether its government, corporations or whatever.... if it's not their own money it must be handled a certain way in accordance to the law. It's not a Pennsylvanian law, either.

 

[Slamdunkpro]

I used to do 2 10 net 30, people started cutting the check in 10 days (taking the discount) and mailing it 30-60 days later. Arguing with them became more trouble than it was worth. Now nobody gets billed - period.

That's a tough situation Pat, you either turn them away or accept their payment terms. I doubt they're going to accommodate you.

 

[Just Another Sign Guy]

Pat you might want to develop an alter ego..make up a fake name that you use for accounts receivable..that way you can play good cop bad cop, the mean ar person and you the nice small business owner that keeps clients happy.

the best advice i can offer is to talk to the manager in a real human way. that you are a small one man company, a father, a husband (lay it on) and that this is a big amount of money to your company and your family. try to relate on a personal level rather than a corporate sterile level.

and in the future i think you are on the right track let the credit card company play banker and they can choose to pay the cc company whenever they wish.

 

[Circleville Signs]

We have had the same issue recently with a couple of our large accounts (both Fortune 500 companies). After the last time (we were at 60 days and counting), I explained to them that going forward no work would be started until we had a 50% deposit, and no work would be delivered without the remaining 50% being paid.

They didn't like it much, but I've done probably $5k in business with each of them since I put that policy in place.

 

[G-Artist]

I'm not sure how this works, but if you offer a discount say of 2% if paid within 10 days..... some companies by law must take advantage of any or all discounts available to them or they are liable for some kind of unlawful use of funds.

It was explained that if a company does not take advantage of such discounts, they are misusing the companies monies and can be jailed for such an act.

Whether its government, corporations or whatever.... if it's not their own money it must be handled a certain way in accordance to the law. It's not a Pennsylvanian law, either.

Not to start an argument, but good luck with that. No such "LAW" exists that I have ever found or come across. I have numerous volumes on corporate law and no mention there that I recall. Maybe case law - I don't know - not an area I usually delve in. In any case, got a cite?

Even if you were a shareholder, I don't think that you would have much of a chance bringing that charge, via suit, against management. Maybe a good argument at a shareholder meeting to oust current management for misfeasance or malfeasance.

I remember years ago when we offered 3% net discount (an industry standard in those days) if paid within 30 days (10 days on some invoices) Doing work for stores such as Zayres (now defunct), Jordan Marsh (Allied Stores) and the like they would still take the std. 90 days to pay PLUS apply the discount. Even when we charged interest accruing after 30 days it was no use. They paid at 90 days and ignored the monthly statements we sent with the accrued interest. Oh, we could have sued and then lose their business. They knew that. They also knew the volume of work they sent our way which would vanish. The proverbial rock and hard place.

The real world is sometimes a harsh place to do business in.

 

[artsnletters]

I like to give the folks who want to tie up MY money this line: We have a special working relationship with Bank of America. They don't make signs and we don't loan money.

I'm not a bank. I can't afford to pay out for materials THEN wait for payment when somebody gets around to it. I've also explained to some people that "How would you like it if YOUR company held YOUR paycheck for an extra 30 days? What would that do for your finances? Same thing...This IS MY PAYCHECK.
That's why i do COD....cash is king, I give discounts for cash. Much less headaches.
Tim

 

[Gino]

Like I said, I'm not sure how that worked, but a company that we did work for told us that by law... if we offer a discount... they must by all means take advantage of any or all discounts. If we put a time limit of 10 days net 30 or whatever.... they still had to do the discounted price and they were no longer allowed to take 90 days as they had in the past. It worked, other than for time of checks passing in the mail, we always had our check within 12 or so days. Sometimes, a check would get 'LOST' and we would call and they would make another check for the disallowed discount portion, immediately.

We started doing it with other companies and believe it or not.... it worked in every case.

However, although we still offer it for a few customers, that was back in the 80's and business tactics have changed since then, so we stopped doing it for the most part and have very few companies that go over 10 days on anything.

Knock on wood, either I'm getting meaner in my old age or somehow I command more respect, but other than a few people.... we haven't been stiffed at all lately.

About two weeks ago, a guy tried to play some games... and he won. He took about 20 days to pay his balance with every trick in the book. He was out of the office for a few days, no one else could sign the check, the accounts payable girl left early, the bookkeeper isn't answering the phone today because of a big meeting and last, the check was postdated when I finally did get it.

Anyway, I can afford these piss ants now and I have more tolerance of them in our business. I wouldn't advise people to do some of the things or actions I do, but for whatever reason, that might not have been a law, but it was something you could do back then.


No argument here. I don't have a site, because it was just a method in which we practiced with very good success.... long before Gore invented the internet.

 

[imagep]

"How would you like it if YOUR company held YOUR paycheck for an extra 30 days? What would that do for your finances? Same thing...This IS MY PAYCHECK.

Exactly. If they held his paycheck for 104 days, he'd quit.

Big companies hire a lot of MBA's, and one of the basics of "good financial management" that they teach in MBA school is "collect early pay late".

What they don't realize that personal relationships are more important that "good financial management" and that they are distroying their relationship with their vendors when they pay late.

It really ticks me off when I have to go to the bank to borrow money and I am made to feel like a begger and a second class/second rate business person because I dont run a large company. Then banks will wine and dine these big company executives and loan them zillions of dollars. If I paid my bills as slow as these big companies do all my stuff would be reposessed and my credit scores would be terrible.

There is definately a double standard.

 

[imagep]

Like I said, I'm not sure how that worked, but a company that we did work for told us that by law... if we offer a discount... they must by all means take advantage of any or all discounts. If we put a time limit of 10 days net 30 or whatever.... they still had to do the discounted price and they were no longer allowed to take 90 days as they had in the past. It worked, other than for time of checks passing in the mail, we always had our check within 12 or so days. Sometimes, a check would get 'LOST' and we would call and they would make another check for the disallowed discount portion, immediately.

We started doing it with other companies and believe it or not.... it worked in every case.

Probably is not a law but a rule of that corporation. Taking those discounts is very lucritive for them. And when you dont offer discounts and when the company just simply refused to pay late fees, paying late is also very lucritive for them.

A lot of times I have noticed that people become confused about what is actually a law or what is simply a corporate policy. I have had employees tell me that there is a law that they have to be given a X minute break on the clock every X hours. Sure, some company that they used to work for may have had that policy, it may even be a good policy, but that aint no law.

 

[Pat Whatley]

I've tried the discount idea before and had the same response G-Artist had....everyone took the discount regardless of when they paid. All the discount did was made an accounting problem for me to deal with for less money....a lose/lose situation.

Y'all don't get me wrong, the vast majority of my invoices get paid early, just every now and then one of the companies is running short of cash and small vendors seem to be the first to get passed over.

Life will go on...

 

[Just Another Sign Guy]

Big companies hire a lot of MBA's, and one of the basics of "good financial management" that they teach in MBA school is "collect early pay late".

.

hmm that's interesting i must have missed that lecture in "mba school" ..we did however study analytical and critical thinking, interpersonal relationships, conflict resolution, business theory etc. granted creative problem solving was a reoccuring subject but i never heard anyone encourage this technique you have coined 'collect early pay late'...

 

[crewchief97]

I've been in business for over 36 years now and only extend credit if I can afford to lose the invoiced amount. Trust me you will get stuck sooner or later!!! I have the cigar box full of good people to prove it. On the 90 day accounts I charge more up front to cover the interest and late payments. This is the big corps and government way of doing things, they don't care when you get paid as long as they get their paycheck.

 

[imagep]

hmm that's interesting i must have missed that lecture in "mba school" ..we did however study analytical and critical thinking, interpersonal relationships, conflict resolution, business theory etc. granted creative problem solving was a reoccuring subject but i never heard anyone encourage this technique you have coined 'collect early pay late'...

Hmm, sounds like you learned all the big fancy words, but none of the basics of financial management. You should have attended class more often.:Big Laugh

Please note that I never claimed to have "coined" the phrase "collect early pay late". It is a very common statement made by college finance professors who are too frustrated to actually teach a class.

Would you like me to give you a short lesson in the "time value" of money? I guess you must have missed that class also. Or maybe you should just read this book: http://www.amazon.com/Sell-High-Collect-Early-Late/dp/0131094394

And here is another reference to the expression: http://www.moneysavemoney.com/publi...eir_business_Collect_early_and_pay_late.shtml

And another: http://online.wsj.com/article/SB125167116756270697.html
and another: http://www.openforum.com/idea-hub/topics/money/discussion/pay-early-or-pay-late-the-choice-is-yours

The next time you choose to ridicule me about my knowlege of business terminology, you may want to google what I am talking about first, it may save you some more embarrisment.

Regardless, why do you feel compelled to respond to every post I make and why do you attempt to belittle me with your every response?

 

[High Octane]

I just got paid last week for an invoice from December....when I opened the envelope there were four checks in it....the invoice was for nine hundred and some odd dollars...there were four checks in there from four different companys the guy owns...all for the same amount totalling the amount of the invoice...kinda wierd....took 6 months though to pay the bill....and mind you this is for another sign company i did work for.

 

[SurfaceSigns]

On the sign side of things, I'm mostly COD or prepaid, other than a few good clients. With them, it's net 30, and they are all pretty good at paying on time. However, I am still growing the sign business, so it's not really a large dollar figure anyways.

With my main business, everything is Net terms. We do 3%10 Net 15 days for most accounts, and most companies take advantage of the quick pay, and mail the cheque when it's cut. There are a few accounts that are Net 30 and Net 45, but the companies are upfront about the terms in their PO, and again, they always pay on time (within a few days of due date).

I do believe that government and crown corp's are supposed to take any quick pays available to them, without delaying the cheque.

An option we take advantage of with larger corporate clients and government is to receive payment via EFT. The funds are in our account the day they process payment. Beats waiting for the cheque!

Thankfully, it is extremely rare to have an account go 90 days. Must be very frustrating.

 

[andy]

The best advice I was ever given is don't offer credit.

Over the last few years I've received a blizzard of official information packs from the administrators of companies who have gone bust. We get this information because we've been suppliers to the companies in question some time in the recent past.

When you sit down and read these information packs you get an idea of where an unsecured creditor stands in the pecking order. If there is any money left in the company the administrator pays almost EVERYONE else before turning to the unsecured trade creditor.

I've seen settlement offers which range from 2p to 5p in the pound.... if you supplied these companies and did not get paid before they went broke the BEST return you are going to get means you taking a 95-98% loss.

It's all perfectly legal and it's one of the biggest reasons that other companies go broke. All it takes is for one big business to hit the skids and a tsunami of financial losses sweep through a whole range of suppliers and sub contractors. Business financing is a risky business which even the banks are having second thoughts about.

When it comes to big business I've watched a lot of people go broke waiting for their money... you have no leverage and your suppliers will pull the plug on you long before your big business customer feels pressured enough to pay you.