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Working with bad-paying clients
Dr Nic Twinks
✭✭✭
in Clubhouse
A few months ago, I was really struggling with a bad payer (I work freelance). I worked for them for three months (a few days a week - so, whilst it wasn't my only income for those months, it was the majority) and so sent them three invoices - one a month. They paid all of them late. Even when, after the first one was late, I took to emailing/ringing them about a week before they were due to 'remind them' and tell them exactly when they'd have to put them through BACS. The finance department NEVER returned my calls and my actual client just never seemed to care - she did reply to emails and say "sorry, we're not usually this bad!" but didn't really get HOW bad it was (it caused me real financial problems at the time).
Oh - this is all despite the fact that THEY insisted on giving ME a contract - written by them - which stated they would pay all invoices within 30 days.
I've had an email from the client saying basically "hi...we have some more work for you...it could well be a few days a week over a long period...can we meet to discuss?"
I wouldn't say I don't want the work - it's quite OK work, and I enjoyed it, and the people are nice (apart from being twats...LOL!) But - what do I say? Do I cut my nose of to spite my face and say "no, you were such bad payers that I refuse to work for you again?" Or do I say "I would be interested in discussing, but the fact that you broke your contract every time I issued an invoice caused me severe financial difficulties, so I would need to be 100% certain you will pay invoices within 30 days in the future?"
What would you do? Is there anything more I can do than have a contract and issue them with penalty fee/interest for unpaid invoices?
Oh - this is all despite the fact that THEY insisted on giving ME a contract - written by them - which stated they would pay all invoices within 30 days.
I've had an email from the client saying basically "hi...we have some more work for you...it could well be a few days a week over a long period...can we meet to discuss?"
I wouldn't say I don't want the work - it's quite OK work, and I enjoyed it, and the people are nice (apart from being twats...LOL!) But - what do I say? Do I cut my nose of to spite my face and say "no, you were such bad payers that I refuse to work for you again?" Or do I say "I would be interested in discussing, but the fact that you broke your contract every time I issued an invoice caused me severe financial difficulties, so I would need to be 100% certain you will pay invoices within 30 days in the future?"
What would you do? Is there anything more I can do than have a contract and issue them with penalty fee/interest for unpaid invoices?
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Comments
we charge interest at 3% per month on late payments our terms are usually 90 days plus we put up the rates for known bad payers to ensure that there is some benefit when we get paid.
Can you not invoice the weekly
I work self employed and ask all my clients to sign an agreement that payment will be made in full. Could you do something similar? I understand that you have to sign a contract but I don't see any reason why you couldn't have a legal document drawn up stating that you would require payment within 30 days of invoicing. At least then you have it all in writing and if they get slack again with the payments you can say that you will taking the matter up with your solicitor.
I understand you don't want to p1ss them off but you've got to look out for yourself
I think it would be more than reasonable for you to raise the issue of their poor payment record and ask for assurances that you would be paid promptly for any work you did in the future.
Can you not do work for someone else? Wouldn't this be easier?
Or can you not employ a mangement company to look after this sort of aggro for you?
I have a number of different arrangements with my clients - the key is to agree the scope of work up front and if possible agree a fee for completing the project. Then include a series of payments in your T & C's with interest charges for any late payments and also provide in the contract that you can terminate if they fail to meet their side of the deal. Why do you wait 30 days - I would state 14 days maximum. If you have completed the work to a high standard you deserve to be paid.
It sounds like they need you more than you need them!
Work for them again but ensure you have a direct contact for the head of their finance department. Ensure the contract hasd an additional clause confirming payment will be met within 30 days and if not, the 3% increase descrobed above wioll be added. If they don't agree to that from the off, work for them anyway and if they pay you late sue them for 3% for late payment. Although this isn't written into the contract, any court in the land will see this as a reasonable payment for breach of contract.
If you don't work for them, sue them anyway for previous late payments! I love suing companies...
What's with my spelling???
You got paid it all eventually didn't you. And your rates were good I guess ?
Get a report on the company and the directors b4 extending them much credit.
Duport
Speaking as someone who has been taken for £70k and £12k (ouch !) respectively you have to be very careful not to do too much without being paid, so don't extend your terms no matter what and chase unpaid bills even if you think you aren't getting a response. Don't extend them more credit than you can afford to lose.
The other option may be to factor the debt, specialist companies will pay 80% of the debt on invoice and charge a fee and percentage until payment is made, BUT if you put the rates up slightly will cover your costs.
We factor our accounts for cash flow, if the account is not paid in 120 days we have to repay the factors the money then charge the clients the interest mentioned above. email me if you want any info
Factoring, well, as long as they pay in the end but it really is a bit of a desperate measure.
Offer an incentive to pay pro-forma on your work. Raise your rates by a few percent, they want you, if they pay up front they get you at the old rate. Paying late can get out of hand, and then the credit builds, you get in trouble and need the work as you've commited your time and need them to pay.
If they can pay you late they will, (cheap credit terms innit) If they are struggling to find the cash to pay eveyone then serious issues could evolve.
Agreeing they should pay you on time when you go back is unlikely to help and persuing debt legally is a long involved process.
We are a legal service company providing a specialist service to solicitors who are notoriuosly slow payers (despite allegedly being debt recovery experts).
Factoring works for us (with two exceptions being bad payers) it gives us guaranteed cash flow on invoice, other alternative would be overdraft of £250k and i dont fancy that.
Do what you have to do regarding taking them on again, then work towards getting a better client base in the future. Even if you do work with them again, it can't be good for your self- esteem (and stress levels) to be treated this way.
If you are any good (I'm sure you are), then with some effort, you can get enough work that you do not need to work with such people.