problems getting paid!!!!!

butcher

I run a small business and in the past year i am having severe problems with customers not paying their accounts in full and or on time, with the current economic climate i am really starting to feel the pressure(as are many others)i am thinking of using professional debt collectors,has anyone expierience in using debt collectors before?If so was it successful,how did it work,which company are best?
Any help would be greatly appreciated.Thanks

Dabko

Butcher

I feel for you, i really do - having to deal with the same sh1te myself, spending anything up to 20 hours a week chasing late payments.

I would recommend you stay clear from the debt collection agencies for now and go with you solicitor. Debt collection people will charge you a fortune.

Firstly, post everyone a statement of account with a letter of request for amounts outstanding. State in the letter they have 7 days to clear the account or the matter will be referred to your solicitor for collection.
Now, strike a deal with you solicitor as to:
1) how much to send out collection letters -he says 30, you say 15!
2) % of recovered funds (not% of outstanding as you may have to drop to settle) - try and negotiate at between 10 and 12 % commission for recovered sums.

Note:
Make sure you dont get one of those lazy ass, celtic-tiger fat, solicitors who scratch their asses thinking they are worth so much more than the sorry economy can afford to pay them! Find someone young and fighting who has not being tarnished by the greed of the property boom days.

Most importantly – stick to your guns. Instruct your solicitor that you will be taking everyone of your debtors to court if they don’t pay up, in full. (however, you may have to negotiate here e.g. Bob owes you 1150. Would you settle for 1000 straight away?)

I took a guy to court recently who owed 1000 plus and it worked. 2 days before the hearing, the guy came to me with the full amount and asked to call of the case.
One thing to make clear also is that you alert your debtors that if the case makes it to court, you will be claiming expenses against them (solicitors charge between 200 and 400 euro per court day – mention that in the payment request letters)

Best of luck with it and remember, stick to your threats, its your money, you worked for it.
Its business.;)

misterq

I think Dabko's advice is very good, but before it gets that far, I think you should make sure you have exhausted the direct route and they are just plain refusing to cough up.

If you start hounding someone with solicitors letters or debt collectors, the business relationship is pretty much finished. Granted it may well be already and someone who doesn't pay is not a customer, but make sure you are not going to the next step with too much haste.

lanod2407

Butcher

You don't say how overdue the accounts are - can you put your problem in perspective - e.g.

0 - 30 Days 25% of debt owed
31 - 60 Days 20%
61 - 90 Days 30%
91 - 120 Days 20%
120 Days + 5%

This will show you where the bulk of your problem lies, and will show you where the alarm bells need to go off - i.e. if your 120+ Days value is high.

Right now I'd start with anything over 120 days and press hard to get payment, including a personal visit.
Then do the same for the 60 - 90 days. This will provide you with a good assessment of the likelihood of getting paid these invoices, and you can then take solicitor action against those who are most delinquent and have not responded to your reasonable approaches.

It takes quite some time to get an out of control A/R book back into order. A systematic approach is what's required - easier said than done.


I work as a consultant right now and am typically working on "30 days net" terms. Truth is that I never see anything before 45 days and it can go to 60 days. This is my reality and I gotta fund 60 days spend to stay afloat.

There are some organisations who insist on terms such as EOAP50 ........ that's 50 days after the end of the current month. So you work in January, invoice early Feb, and the clock on the 50 days starts to tick at the end of the month you invoice - February - so that takes us out to April 19. Payment then happens when the next "payment run" occurs - and can be up to a week later. You work in January and get paid last week of April.

While I may have long periods to wait for payment I consider myself lucky in that the organisations I work with always pay, just a bit later than one might like!!!!

lanod2407

Just to add .......... beginning to see payment issues with large organisations also ....................

A friend showed me his utility bills yesterday - one utility phoned his house to chase payment about three weeks after the bill had been received.

Another utility sent him a reminder with a sequence of events that would kick in on specific dates if he does not pay promptly, from late payment fees of over €10, to suspension of service and delays in reconnection.

Both of these instances were triggered a short few weeks after the initial bill had been issued. Looks like the big guys are flexing their muscles to make sure that they get their bucks!

Mr Clonfadda

we use a product called Credit hound which links to various accounts packages. It allows you to start sending emails/faxes/letters to customers even before their overdue. Less threatening than a solicitors letter but nearly as good. You can also use credit collection agencies. The one we use charges 20% of a commission on what they collect. so we give warning to customer about this if they still don't pay we add collection charge of 20% and sumit for collection.

Bluefoam

A company I worked for was purposely was not paying people/on time...

One day a builder turned up at the door looking for his cheque at 9.00am, he sat there all day waiting. The accountant was afraid to leave her office & didn't even get out for lunch... By the end of the day the guy had a cheque in his hand...

Dabko

had to mention this...

A friend of mine a couple of years back owned a sign writting company. He had a couple of people outstanding on their invoices so the smart sh1te took one of his customers un-sign written vans (they werent due to collect for 3 or 4 days), printed out a massive logo saying 'Debt Collector' and put on the front, back and 2 sides of the van.
He called to their houses, and when there was no sign of the doors being answered, he called to all the neighbours enquiring about mr.x. He then remained in peoples drive ways for hours on end, every so often tooting the horn at passing people!!
He said it was the best debt collection process he ever used!:D

Savman

Anything over 30 days old get hounding asap, the longer you leave it the harder it will be to get it. Make sure you get the Financial Controller or Accountant and not some random receptionist. Calls, emails, letters sent by registered post. If that fails in 14-21 days then refer to the legal process and advise the client beforehand that you will be left with no alternative. Keeps you as the good guy forced to turn to a bad guy to get paid.

No one method works for lazy payers, just be persistant in whatever you do.

butcher

Thanks for the advice some excellent points here i will definitely use,maybe i was a bit soft on people up to now but i will definitely be pushing hard from now on this is MY livelihood after all.. Thanks again