Slow pay clients - any advice?

digitalvision313

This forum is great - and hopefully I can get some advice or help.Our company does very well in sales and services delivered, growing every month for the past 18.However,
one of the toughest issues we face is slow-paying clients.  Because we
are mostly B2B, we deal with almost completely invoicing.  We rarely
get stiffed - but some corporate clients are taking as much as 120 or
240 days to pay us and then complain when we do a work stoppage or a
shutoff, asking if we really want their business.Talked to some
friends and associates locally who I don`t do business with, and they
said that I shouldn`t even consider shutting people off until six
months because they themselves take 180-240 days on a regular basis to
pay vendors.In general, we`re constantly running at 120 and shortening it to 45 would really make life easier.Does
anyone in the `nation have any suggestions?  As if this is going to
keep happening, or is the norm and I just didn`t know it - I should
start initiating the changes that need to be done now.

BizAtTheBeach

I think 120-240 days is way out of hand and it is really taking advantage of you.  I can understand maybe going to 45-60 days on net 30 terms, but 4 to 8 months is abusive.  In my past corporate life, paying and getting paid rarely went above the 50 day range.  It is quite common for big businesses to push their accounts payable into the 45+ day range as a rule, but on the other hand if we had clients that were paying us over 120 days late we would assume they were having financial problems and cut them off from doing business with us until they both paid off their balance and could prove to us they were credit worthy.  I would confront them, what could be their defense?  It may be some business you have to walk away from.  Tough decision good luck. 

william

The longest my customers are given is 30-days.  Clients that consistently float are then followed-up regularly for payment.  Cash flow is king and floating takes a company down more than anything.  My business is small and I don`t have the resources to work as a charity.

DMstone

Loose them!!!!
They are not worth it. slow pay customers are stealling your money and your time!! let them know that you are not a bank. These guys are using your money for 4 to 5 months for free that is @#$!@!. Try not paying your mortgage or rent for that period of time. Slow Pay is almost as bad as no pay. If someone can`t afford to pay on time then they can not afford the product. They will put you out of business
Let me know if you want to know how I really feel.   

checksyes

Have you considered selling your accounts receivables?  In most situations, for a very small percentage, you can receive regular monthly checks from investors.  This is a great solution currently used by medical clinics, hospitals and other B2B providers.  This allows them to move forward with building their business through capital expenditures and providing services - not worrying about when the next payment will let them continue.
If you would like more information, I`m happy to provide options for you!

digitalvision313

Hey All,Thanks for posting Jess, it reminded me to do an update.First, I got a lawyer.  Best move - as unfortunately, I`m learning lots of people will be glad to not pay you as long as they can; and a letter from a law firm usually works to be a motivator.  Also, we now demand 50% payment up front via credit card or check, no matter who you are.  That way, even if it`s a large company, we`re in their system.We`ve collected on some - and some are going to court shortly unless they pay up.  I`m also finding among my network of friends that they`re seeing the same issues too, and more so lately, especially clients in-state (Michigan).  They`re seeing no-pay rates double and triple for the first time in decades, so it just means it`s time to be extra cautious.Checksyes, send me a PM - I know you left a voicemail - some debts are smaller, some larger - but I`m really looking at ideas for factoring with some of the larger clients that are coming in.DMStone, I appreciate your feelings on this