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Late payment of bills growing

Discussion in 'Finance & Accounting' started by Scottish Business Owner, Apr 14, 2008.

  1. Well 1988, or rather '87 all over again indeed... :(

    I've just had a letter from an insolvency practitioner telling me that the one decent bloke out of the three who owe me money has just gone down. :sad: It's a bloody shame. He's a decent chap in his own right and the lad who works for him has a wee boy of about a year old. That's two good folk blown out the water.

    This'll be down to him getting screwed over by that big client and the banks behaving like the F***wit greedy B***tards they are. As much as I'm smarting from the knock-on effect of this on my own finances I could weep for these decent hard-working people who have been brought to this point. NO doubt we'll all survive one way or another....

    Creditors meeting on the 3rd... :( I can think of a million other things I'd rather be doing....
     
  2. Sorry to hear that Matt. I'm dealing with similar situations with a number of clients I work with and it's pretty soul destroying. Businesses that six months ago you would have regarded as being solid now seem very shaky.

    The difficult thing for businesses though who actually use credit checking etc is that the information they have is so far out of date for businesses to make any sort of judgement on their ability to pay. My experience has also been that many people at this time of the year will try and hang on until Christmas so I thnk January and February will be the time when we see how bad things really are.
     
  3. Well; normally I don't do credit and my payment polices are such that the deposits I take will tend to minimise losses. It'll mean our old production vehicle gets patched up for another year rather than replaced; that's all. No huge trauma. And to be fair this particular fellow cleared most of what he had to before he was forced to pull the plug....

    BUT the client who brought him down is a public body! :thumbdown::thumbdown:

    With that in mind I'm inclined to do what I can to help him bounce back. I'm just gutted for the fellow, absolutely gutted.. Good honest people just don't deserve this sort of flack.
     
  4. MarkB

    MarkB Administrator Staff Member

    What duration of payment terms are people experiencing at the moment?
     
  5. Businessman

    Businessman Member

    That last post but one is actually mine from a previous 'life' :p . Nearly eight years on and the guy survived, but had to restructure (became a sole trader again). The two that owed me money coughed up on receipt a small claims notice.

    For many years now I've had a policy where a 50% deposit PLUS any extraneous expenses have to be paid before we shoot. The rest is due on delivery - and we can withdraw copyright on the finished programme should the client not cough up. - The last one I had an issue with was the guy that got screwed over by the local authority client; and with hindsight that was always going to happen to him as the internal politics of the situation meant they were always going to be rogue clients... They were a Welsh LA and there was resentment at a Scottish firm gettingthe contract.

    But people do tell me it's got worse in recent years - three to six months isn't uncommon when you're dealing with big corporates apparently. I was talking to the workshop manager at my local garage; he used to be in the repair and supply of surgical instruments back in the 80s, and reckons it was cashflow due to slow payers that done for him. - A lot of small-business owners use that garage, and everyone seems to be on the same page with this.
     
  6. MarkB

    MarkB Administrator Staff Member

    I think a 50% deposit, plus any addtional extras, with the balance on or before completion makes perfect sense. While not ideal, the 50% deposit should at least cover your costs leaving you to collect your "profits" with the balance payment - so if the customer did not pay the balance the net financial result would be zero loss althought his is obviously not why we all go into business lol However, it does offer an element of protection.
     
  7. Businessman

    Businessman Member

    It basically almost-covers my immediate overheads - including paying the crew, but by no means a zero-loss situation. That said, the policy does tend to discourage the sort of clients who will take the mik - which, you might argue limits the scope of what I do; but that's fine by me! ;)
     
  8. MarkB

    MarkB Administrator Staff Member

    I would rather have 100 customers who paid in full and on time than 200 customers who offered a mix of late payments, on time payments and partial payments. Cashflow is king in any business - keep the cash flowing and you have a chance of surviving :)
     
    Businessman likes this.
  9. Businessman

    Businessman Member

    Back in my early days I did the whole 'Icarus' thing... Buying into the corporate mantra, wasting money on the whole front of house show etc, and kautauing to the whims and 'pocket wisdom' of business gurus and their disciples... In other words; I bought into the BS, as most (naive) people are prone to do. - But what I found was the bigger the business the bigger the shysters! - And the more dishonest and parasitic their business practices...

    This is one of the many reasons why big businesses leave me stone cold; I couldn't give a monkey about the 'top 500 stuffed shirts' or what 'Forbes' have to say... Because they don't matter! They might be loud and get all the publicity; but they no more represent the reality of business than a Premiere-League player represents the number of people who own a football.

    Let's call a spade a spade here... Delaying payment to contractors is, essentially, theft. And the biggest thieves are the big corporations.
     
  10. selfemployed

    selfemployed Super Moderator

    While the impact is immediate to that individual or that company owed money (which is held back) many people fail to realise the impact further down the food chain. As one company falls behind with payments so one more further down the line struggles and is unable to pay their suppliers, and the vicious circle begins….
     
    Businessman likes this.
  11. RedSky

    RedSky Member

    But so many people expect work to be done first, and then to pay when the work is complete. Can you ask them to pay so much down and then the remainder upon completion?