Advice on first time being burned

[john.k]

One of the biggest construction companies here had a habit of refusing to pay subcontractors they didnt need anymore,and sending them broke.

 

[cnctoolcat]

A couple of good rules to follow for a new customer (and especially existing customers):

1.) Make sure you get the name and contact information of the person in the company to contact to GET PAID.
Not the secretary, not the clerk, but the Big Guy who actually approves and decides to cut the check. You only want to talk to the Big Guy when absolutely necessary. The buyer or engineer or manager you're dealing with will know who the Big Guy is in the company.

2.) Whatever your terms are, a few days either before or after the invoice is due, make a call to the accounting secretary or clerk and simply ask "when do you plan to pay Invoice #___, which is/was due on ## date?"

If they don't get back with you within a day, call them back. No definite answer after a third attempt is probably gonna require getting the Big Guy on the phone....after the invoice is due so he can't weasel out.

But don't wait too long. And document phone calls with follow-up emails to the person describing what was said and agreed-to during the phone conversation.

No help from the Big Guy means you don't have a customer, at best a questionable one.

ToolCat

 

[Mcgyver]

if you've got a hair trigger are ready to go to 100% boil in a heartbeat, don't interact with customers. You have to figure that out; imo its too hard to get customers to go and run them off.

How big a business? Decent sized businesses don't go around screwing vendors for 4000 when they've issued a PO and received the goods. There are lots reason why this could have transpired that don't include the customer trying to screw you. 4000 might be a lot for you (i don't sneeze at it either) but its hardly enough to hire a lawyer over even if they did.

I've handle things sometimes by having someone phone as a collection agent before - one case 6 months over due, huge company. Got paid right away, they'd made a clerical error and thought they paid it so ignored our communications....calling as a collection agency simply escalated it to the level where there was an intelligent person who spotted the error. No one was trying screw anyone.

You did screw up not getting a signed packing slip/receipt for the goods. However if they've acknowledged receipt, be just polite and persistent and you'll get paid without burning a bridge.

Also, 30 days terms are often 45 or 60 in reality. You want to be a good trade partner and pay on time, but if we're getting stretched sometimes we have to stretch and 99% of the supply chain is fine with it. they get it. Its almost comical though when you get little shop freaking out on day 31 because the check hasn't arrived. Next.

If you're granting terms and moving up the food chain, do your due diligence and stick with good policies - you are loaning money when you extend credit. Shouldn't you carefully check out who are loaning money to? And operate with PO's, receipts, deposits etc - they're contractual and matter a lot, esp when it its the fan. And if they paid 50% up front before, why come off that?

There are shysters for sure, but despite the public's messed up view of business and capitalism, those of us in business know 99.999% of business transactions work out just fine. Just be a bit patient, polite and persistent.

 

[cnctoolcat]

I certainly would not insult a customer by calling to ask when they intended to pay unless it was very late, like more than a month.

We're discussing strategies to get paid reasonably on-time.

For a brand new customer, calling the relevant person in accounting around the due date of an invoice and politely asking when they intend to pay is not insulting. It's just business. Your company did the work, the work was received, and now the term is up, and it's time to get on with the paying process.

More often than not the accounting drone has been trained in stall strategies such as "We never received an Invoice". You want to take care of all the excuses around the due date, not weeks or months after.

This strategy also works for any customer that is stretching the terms too long.

You want to be proactive here, again especially with new customers. The "payment process" can take a week or more, even after the Big Guy says to cut the check.

In general, to protect your business later-on in legal proceedings if necessary, you need to be actively contacting them after invoices are due, and do not let them routinely take 30+ or more days than the written Terms.

You have to prove to the bankruptcy judge your company did all due diligence in attempting to collect on time.

A lot of Net 30 accounts average Net 60 or more. You're better off (legally speaking) getting them to change the terms to Net 60, then holding them to it.

That's what we do at the Cathouse. Net 60 customers get the bell rung no more than 5 days past the due date, and if an order is open it won't ship until we know when the check is coming.

Yes, probably 99% of companies that are buying precision machined parts do pay their bills. But most will try to use your company as a bank, often extending the stated terms.

Just make it your company policy to politely hold them to the terms they agreed to.
It's just business.

ToolCat

 

[Fal Grunt]

but when you start asking for special stuff in their office

You consider requiring a shop to follow through with their agreement special?

I have no idea if people are out, or sick. No one communicated. If someone was out of work for an entire 4 weeks wouldn't you think that someone would cover that persons desk? Everyone I know does a process called "management". This concept that if a person is out sick, their tasks and work is covered. Everyone I do business with uses that process. I have not noticed any difference from any of my other customers or vendors. I just ordered a batch of custom tooling from the grind shop I use, 1 to 2 weeks per normal. Steel supplier is shorter lead time than normal. Everyone is meeting or exceeding their quoted delivery date.

I am a one man shop, and I still manage, when sick, or on vacation, to put an "out of office" alert, or reply to important time sensitive emails. Everywhere I have ever worked, my machine was covered, my work was covered by someone while I was gone, whether sick, or vacation.

Its got a lot to do with your attitude....if you accept bad payers and bad debts as just something that happens,it will happen a lot.......If you let the bad payer know for sure he s made a bad choice ,and back it up,its surprising how quickly the word spreads.......the habitual bad payers try their tricks on someone else .

Yea, there's a local place. They have lots and lots of work available. Low paying work, but lots of it. 90 day terms. 120-150 day actual payments.

I don't believe that that any large company with on staff accountents make any accidental payments that short venders. They play all kinds of games to delay payments even when they don't have to. How many times have any of you been over paid on any invoices?

My wife manages a team that handles close to half a billion dollars in short payments PER YEAR. She would argue that you are very incorrect with that belief. Over pay, never. Short pay, as much as possible.

if you've got a hair trigger are ready to go to 100% boil in a heartbeat, don't interact with customers. You have to figure that out; imo its too hard to get customers to go and run them off.

If they don't pay they are not a customer. They are a thief. They have stolen my time, which is more precious to me than anything. If they are incompetent why would you want them as customers?

I interact with all of my customers. Some of them have become friends. This is the first one in 12 years. I do not think it is a ME problem.

Decent sized businesses don't go around screwing vendors for 4000 when they've issued a PO and received the goods.

Absolutely they do. See my previous comment.

You did screw up not getting a signed packing slip/receipt for the goods.

I have a delivery receipt, and proof of delivery.

30 days terms are often 45 or 60 in reality.

I can't think of one of my vendors I have terms with that would be OK with me taking another 15 to 30 days. In fact, I have terms with 3 vendors. I forgot to call and pay the one in the 30 days and on the 31st day they called me to ask how I would like to pay.

Do you pay your vendors in 45 to 60 when your terms are 30? What's the name of your business?

Its almost comical though when you get little shop freaking out on day 31 because the check hasn't arrived. Next

Maybe you missed the point that it was 30 days late, not 30 days. With your math, then I'm at 60. That's still OK by you? Is 61 still OK by you? What about 91? 101? When should I start caring?

Just be a bit patient, polite and persistent.

4 weeks over due is the limit for that patience and politeness. Week 5 means I start contacting like I did.

 

[HappyWyo]

I've been in business long enough to have accumulated over ten thousand dollars in unpaid invoices. Some people have a lot more. I've had customers like yours and customers even worse. They don't pay, use rubber checks, go bankrupt etc. You are lucky you have been in business as long as you have and only been ripped off like this once. I took a customer to small claims court and won, and lost. The judge ordered him to pay, and dismissed us. I told the judge if he lets him go he won't pay. The judge said he had no authority to physically make him pay. I would have to get an attorney to try to put a lien on his wages. The whole thing was a waste of time and money on my part. If you go through all that you are probably going to get a bankruptcy letter in the mail saying you can't collect. I've gotten more than one. If, and that is a big if, you can find a good collection agency that is your best chance. Then just forget it. Let them do what they can, but don't count on it. Letting your wife get emotionally involved is a mistake you will eventually regret. Do the work yourself or the pressure will cause problems in your marriage. You won't see it coming. Stop writing letters. If you write enough letters they will eventually make it to the Internet and your adversary will make it look like you are the biggest thief in the free world. I personally like to keep a five star rating. That will get you more customers and income than you lost with one crook. I've been married 43 years to the same woman, and been in business since 1988.

 

[john.k]

And dont worry about ruining your reputation using debt collectors....a relative of mine is a senior medical specialist....the kind who calls himself Mr.......and he uses debt collectors.

 

[Mcgyver]

Did you ever tell us the amount of money involved here?

As to small claims court, years ago I went over a $200 unpaid invoice. The other party didn't show up so of course I won. But, that's only the first step, to collect you have to hire a lawyer to go through the next phase of collection. The lawyer I contacted advised giving up since his bill would be substantially more than the $200 with no assurance I would collect anything. So it was an education that cost me $75, $25 filing fee an $50 to serve the other party.

but how much of your time was involved?

One way to make sure they show up is to sue for 20,000 not 200. Sure its BS, and they get settled before court for say the 200, but it won't be ignored as doing so will result in a judgement that would be worth pursuing

 

[Mcgyver]

Y


I am a one man shop, and I still manage, when sick, or on vacation, to put an "out of office" alert, or reply to important time sensitive emails. Everywhere I have ever worked, my machine was covered, my work was covered by someone while I was gone, whether sick, or vacation.



Yea, there's a local place. They have lots and lots of work available. Low paying work, but lots of it. 90 day terms. 120-150 day actual payments.



My wife manages a team that handles close to half a billion dollars in short payments PER YEAR. She would argue that you are very incorrect with that belief. Over pay, never. Short pay, as much as possible.



If they don't pay they are not a customer. They are a thief. They have stolen my time, which is more precious to me than anything. If they are incompetent why would you want them as customers?

I interact with all of my customers. Some of them have become friends. This is the first one in 12 years. I do not think it is a ME problem.

Absolutely they do. See my previous comment.


I have a delivery receipt, and proof of delivery.


I can't think of one of my vendors I have terms with that would be OK with me taking another 15 to 30 days. In fact, I have terms with 3 vendors. I forgot to call and pay the one in the 30 days and on the 31st day they called me to ask how I would like to pay.

Do you pay your vendors in 45 to 60 when your terms are 30? What's the name of your business?



Maybe you missed the point that it was 30 days late, not 30 days. With your math, then I'm at 60. That's still OK by you? Is 61 still OK by you? What about 91? 101? When should I start caring?

4 weeks over due is the limit for that patience and politeness. Week 5 means I start contacting like I did.

You were accommodating to wait 30 days, but at the same time, mistakes happen, so don't assume the worst. Payments are often not down to the day, about a 2 week stretch would imo be about average. So yeah, after 30 start chasing it. However you'll have more success overall if you do so politely and persistently. Wouldn't the ideal scenario be to get paid and end up doing a lot of high margin work for them over the years?

They're a thief? Seems a bit silly. They haven't stolen from you, they just haven't paid you yet. Unless you have some reason to think they are overtly trying to screw you (like they said fuck you we're not paying), they're probably not trying to screw you. So you play the odds. And its small potatoes (30 days interest on 4000). Your call over how much of a panty knotter that is for you, but I can tell you going to boil over it is self limiting behaviour - the outcome is higher blood pressure and few customers.

btw not going to boil is not that same as doing nothing. I agree after 30, time to call/send statements/drop by etc. But its hardly the time for desk pounding, a lawyer or collection agent.

Hint: if it comes to it, be your own collection agency. Then you get 100% of the funds. As I said, even when it comes to that it has always been just a way to jar the system and knock the cheque loose.

 

[CarbideBob]

...

Do you pay your vendors in 45 to 60 when your terms are 30?
.

Sometimes yes. I know this is very bad. Just got a note from a big Mc supplier that I am over 60.
Oh shit. how is that 300 dollar invoice screwed up to my vendor of over 45 years.

I also give discounted for 10 or 15 days to many customers. Some take it some do not.
GM is second day of second month so 60 plus.
60 days is when you send a note and ask if this invoice in the system or is there a problem.
Over 90 is when you become concerned. worry and poke a bit.
Once you extend any terms you become the bank. Hopefully this is in the price.
If a repeat customer rolls 60 plus all the time month after month and year over year it works out okay but you are floating this loan.
Where does loan money come from? Interest rates or lines of credit are very cheap now but cash on hand could be in the market which has a high yield so far.

There will be times of doing work and never ever get paid if you give terms.
If you do not give terms you get less and smaller customers.
Cash flow is king. A nice steady flow late is not so bad.
Bob

 

[UptownSport]

UCC.

Part of the Uniform Commercial Code intent phrasing says it all '...to expedite trade.'

Unlike other areas such as real estate or private transactions that aren't a normal part of one's trade, you don't need a contract. An email simply stating "I'd like X number of parts' is sufficient to deliver those parts- that's all.

You may have heard of the 'Battle of the forms' where your man at the dock signs a routine looking 'Invoice' that modified every part of the deal ...
It 'sticks.' That's why truckers simply get a time slip from a warehouse, showing they were there, now.

In short, if your state has adopted it (It's a misnomer, it's not 'Uniform' or even universally adopted) and there's any evidence he 'accepted' the offer, he's screwed.

Of course, for small claims court they won't bother to show up, so it really doesn't matter what the UCC says

 

[john.k]

Lotta numbers ...30/45/60/never......whats not been mentioned is time.....you end up spending 2 days a week chasing money that you should not be owed in the first place .........if one of your customers came by and said hes having a hard time...would you lend him $50k ?....or if he says he got two daughters both have to have Italian weddings at $30k each in the next coupla months?

 

[RandoTL]

Small Claims Court does not allow lawyers or witnesses.

Do not assume that because you think you are right(certainly seems so) that you will win. You could lose and that will cost you,including their lawyer.

Small Claims Court does not allow lawyers, nor witnesses. Documentation, SOLID documentation is what wins.

Although not a machinist, I've sued several people for exactly that same thing: refusal to complete payment on delivered work. And with documentation of the agreement, documentation of the work, documentation of the delivery, I won every time.

And, it was all simple. However, there are caveats: small claims can't be brought across state lines, and there are limits to the amount claimed. It often takes a while for the case to go through, and sometimes the f*ckers will simply not pay up even after a court order. But, there are ways even in that case...the court can be very helpful in these matters, and having the county Sheriff show up to serve them papers and seize assets can be a fun thing.

 

[triumph406]

Company I've done some (exceptionally profitable work) for just laid off 30% of it's workforce, got about $6500 in invoices outstanding.

Wonder whether I'll be like the OP and coming here and crying like a baby if they don't pay?

Probably have to put this in the loss column of the win/loss table of work paid/unpaid.

Not the first time it's happened. Probably won't be the last.

 

[CITIZEN F16]

Immediately apply cold water or if unavailable apply ice, burns are nasty.

 

[triumph406]

Apparently I'm going to be paid so panic over.

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edited by removing last paragraph

 

[otrlt]

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I'll go back to crying myself to sleep over the injustice the OP is suffering.

oh the humanity.....

Hello triump,

You seem to poke fun at the OP's problem, while gloating of your sudden resolve of your own business debacle.

That is not good... for you.

Don't step on any cracks on the sidewalk triumph.

 

[triumph406]

Hello triump,

You seem to poke fun at the OP's problem, while gloating of your sudden resolve of your own business debacle.

That is not good... for you.

Don't step on any cracks on the sidewalk triumph.

For the first time ever I agree with you, the last paragraph was not neccassary.

 

[otrlt]

For the first time ever I agree with you, the last paragraph was not neccassary.

thanks triumph,

I make mistakes frequently as well, but I know what you have said.

 

[Newman109]

Small Claims Court does not allow lawyers, nor witnesses. Documentation, SOLID documentation is what wins.

Although not a machinist, I've sued several people for exactly that same thing: refusal to complete payment on delivered work. And with documentation of the agreement, documentation of the work, documentation of the delivery, I won every time.

And, it was all simple. However, there are caveats: small claims can't be brought across state lines, and there are limits to the amount claimed. It often takes a while for the case to go through, and sometimes the f*ckers will simply not pay up even after a court order. But, there are ways even in that case...the court can be very helpful in these matters, and having the county Sheriff show up to serve them papers and seize assets can be a fun thing.

The limit on small claims in California is $10,000. Witnesses are allowed. Plaintiffs may appeal a loss but defendants may not.

Even with a judgment, a plaintiff will have difficulty collecting, especially if the defendant is a corporation.