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Discount on invoices - what would you do?

16 replies

perhapstomorrow · 19/10/2017 09:38

My dh and I run our own small company. We have done work for a large contractor over the past year or so. The contractor has been awful with late payments but because they kept us busy we stuck with them. However, we have three remaining invoices from this project which are overdue. The contractor is asking us to knock £4k off the invoices, as in their eyes, they have given us lots of work.

We obviously don't want to do this as £4k to us is a lot of money. At the moment we are going through a punch point so need as much cash as we can get. They have caused us nothing but stress getting payments from them. We even had to get a loan out to cover a late payment. We have said that on future projects they can have a prompt payment discount but they keep coming back asking for this money off. They obviously won't pay the outstanding invoices until we agree.

What would you do? We are currently working on another project for them so they could drag their feet paying for this work. I really feel like the contractor has us over a barrel and is bullying us into giving them a discount. Any advice would be much appreciated.

OP posts:
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perhapstomorrow · 19/10/2017 09:51

Sorry I do have another thread in "what would you do" but then thought I may get more advice here.

OP posts:
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MrsEms · 16/11/2017 12:22

Hi Perhapstomorrow,

Do you have a purchase order from them stating the value of the works to be done?

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ArcheryAnnie · 16/11/2017 13:29

Do you have any alternatives to working with them in the future? Or do you really have to keep them sweet?

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outabout · 16/11/2017 13:35

There are government guidelines and suggestions for small businesses dealing with this area. Maybe worth a search on the .gov website.
Although not so easy now, you could put the price up slightly then when invoicing give them a price but offering a 'discount' for prompt payment (basically the original price).
Not sure how you get out of where you are now though, sorry.

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ImAMarshmellow · 16/11/2017 14:12

Can you start billing them mid project, so if it’s estimated to take 6 months they pay an amount per month in arrears totalling 50% of the final bill, then the remaining 50% can be paid upon completion of the project to a satisfactory level. (If they are not satisfied with the job then can discuss discount/additions terms at this point.) discount placed for prompt payment of the final chunk depending on how quickly its paid? 10% off the remaining 50% within the first month, 5% off the remaining 50% If paid within 2 months of job being completed. Etc.

Can you afford to stop working for them?

Is 4K a large amount of the overdue bill or is it a small amount compared to what they owe.

If they are refusing to pay without the discount, allow the discount and then refuse to work with them again until they agree to a method that actually works for you.

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PeaPodPopper · 16/11/2017 14:28

I am self employed and I hate this kind of, in my eyes deliberate, behaviour.
If you gave them a written quote which they accepted, then they have to pay it, never mind them thinking they're entitled to a discount. They lost that when they caused you to take out a loan - with all the added interest that will have created.
If they refuse to pay in full then I wouldn't mess about, it would be straight to the small claims court. ....or more depending on what the amount is.

How far are you on with the new project? Can you stop that and refuse to continue until they've settled up this first lot? /can you afford to walk away from this 2nd project altogether?

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ForgivenessIsDivine · 16/11/2017 14:44

Sounds like standard big company behaviour I am afraid. Taking early payment discount without actually paying early. And bullying smaller suppliers who they know are not in a position to refuse the work or refuse to supply goods.

If you can afford to send this to a debt collector, I think I would but only if you can do without the future work.

Do you have a seperate relationship with those responsible for commissioning the work and those responsible for paying? Could you ask the commissioners to speak to the accounts / finance department to say that you have refused to carry on unless these outstanding invoices are settled in full and that you are prepared to have a round the table meeting to discuss payment terms and discounts once these have been settled in line with agreed terms?

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Swizzlesticks23 · 16/11/2017 14:47

Just say no

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Shen0102 · 16/11/2017 19:19

Just be honest with them and tell them how much you're financially struggling as it is. They might just think you can afford to lose the £4k as you're most likely keeping up appearances with them.

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PuppyMonkey · 16/11/2017 19:25

I'd stop doing any more work for them until they paid the outstanding money owed. I know that might be difficult if they are your main client, but the chances are they won't pay you anyway.

Keep sending the statements in, keep ringing them, keep saying you are unable to offer a discount for work already done at your agreed rate but that you may be able to offer a discount for prompt payment in future.

If that doesn't work, take legal action.

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MistressDeeCee · 16/11/2017 22:08

No - don't do this. You did the work, they owe you the money. You'll be making a rod for your own back if you agree to this. I learned long ago that even if a big regular client was giving me work I had to cut loose - extremely late payments can cause your business to go to the wall.

No amount of goodwill/regular work from 1 client is worth you being broke and bankrupt, with staff and materials still to be paid for.

I won't be caught out by big clients who will take up all my time doing their work, then cause untold stress by not paying for months.. having to chase them is an awful anxiety. In my case I find local authorities are the absolute worst.

I can't live on air. It's up to you but I would categorically refuse to be underpaid for work I have delivered.

There is no point being self-employed if you allow yourself to be beholden to someone who's acting as if they're your (dodgy) employer. Don't be afraid to know your worth, and go after what you are owed.

I have other clients. Smaller yes, but they are who get me by from day to day, they pay in time and I'm fine with that.

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MistressDeeCee · 16/11/2017 22:11

You should also be charging Late Payment Interest. This thing of "keeping big client sweet" is a fallacy and never ends well.

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nancy75 · 16/11/2017 22:14

Unfortunately the discount won’t buy you their loyalty - if a better offer came slningcthey would drop you without a thought. I would go along the lines of usualkyvwe would be charging a late payment fee, we’ve not done that so expect the full original amount

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MsHarveySpecter · 16/11/2017 22:17

I agree with everyone who says nfw would I agree to this - you've done the work, they agreed the rate, why on earth would you discount NOW, when they've messed you around and paid late? They're simply not allowed to do this.

I'd find other work, first, then threaten them with court if they don't pay. And negotiate hard if you work for them in future: charge extra to cover late payment or refuse to work with them.

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MsHarveySpecter · 16/11/2017 22:18
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babynelly2010 · 23/11/2017 00:06

Had this a while ago. Had regular consulting work. Late payments just like what you explained from the beginning. I had several chances to hold them hostage and say if you don't pay I won't release this work but I did not. at the end I let them fall 3 invoices behind. I finally stopped all the work, got the collector but these bustards went under. I got paid nothing and they are still being liquidated and no money left for the small guys such me. I saw the liquidation reports and they screw many people over. They knew and did it deliberately.
My advise, get them into situation when they have to have your work or they miss their deadline without spending too much time on them. Tell them you pay us the outstanding 4k plus late fees plus for all the work up today and you will get all of this work you need by the end of today to stay on time. From that on you start charging 50% upfront. If they don't go for that cut them loose.
If they don't pay still get the collection person. There are people with no win no fee. They could even visit their office and make a very embarrassing time for them.
I know that relationship all to well, it is all sort of nice and continues. Lesson in this is to maintain professional boundaries, no money no work unless you are running a charity but even then...

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