to expect clients to pay on time?

[Proclean]

AIBU as a small business owner to expect payments to come in on or around time of service as is in our policy and as is the norm in my industry?

I am finding there are certain 'repeat offenders' and when clients take a few weeks to settle up it affects everything cashflow-wise - I have to buy supplies from my own money or supplement staff wages from my own bank account, this is making my book keeping terribly complicated too as I have to keep records of these instances where I use my own money for the tax returns. I am not the greatest at admin either and have not much time to do this.

Is it unreasonable to expect payments to come on time or is that too strict nowadays? The clients that are repeatedly late vary in their reactions to being asked to settle ie one is always SOOO sorry but another is just like 'oh ok yeah will do it later' then may well forget again. We always have more than enough clients and I could easily swap them for new ones but I don't want to be too hard on people.

What do you think about it?

I have a 30 day from invoice rule. 2 emails then a week a part then a 3rd saying we will not be able to provide services to you unless you settle. generally they then pay. next invoice 30 days and no 2 emails just the one.
When the offenders have re ordered I have said sorry but we need payment and it has been through straight away. We like you pay our suppliers promptly so i expect others to do as well.

I have no idea on this, but would late payment penalty in the T&c help.

Sadly, that's a very common attitude from clients IME. Regardless of whether they forgot to pay by the agreed date, or don't have a cheque run until the 15th of the month or claim that "their" payment terms are 90 days, the fact is that they're reneging on an agreement. To a certain extent, they'll be relying on their value to you as a client to continue to behave in this fashion. And they really don't care much about the impact that their behaviour is having on your business.

I believe it is legal to have a late payment clause in your terms of business, which would result in an additional % being payable in the event of late payment, but this would of course add to your admin/accounting tasks and I never worked with an FD who was willing to take this stance.

Would it be feasible to offer "beneficial" terms to those who agree to payment by credit card at the time of fulfilment? (These new terms to be offered to new clients at the time of pitching for their business, and to existing ones at a time when you're having a review meeting.)

Of course, I meant that the credit card details for payment would be given to you at the time they agree to that form of payment, so that you can process the transaction at the time of fulfilment! (Otherwise you could find yourself in a similar situation waiting for them to provide credit card details.)

Hey I like that Optimist! Benefits for prompt payers instead of penalties for late payers!!

Thank you and thanks Rosa and ICanSeeTheSun!!

Add extra charge for late payers?

Be aware though that card card facilities can be expensive to lease (as well as the transaction charges) and also there can be a lot of hassle around ensuring that any credit card details you receive are kept safe. Do your maths on this before signing up to anything if you're not currently offering this facility.

Prompt payment discount is a very good idea though so inflate your rates to new clients by say 5% and then offer this % as a discount for early/prompt electronic funds transfer direct into your bank.

Have a 30 day price on you quotes and a surcharge for payment for after 30 days.
IME it needs to be a big surcharge like 20%, rather than 5%.
Send reminders out a week before the payment is due and be prepared to give a week's grace if asked for.

20% much too high from a commercial basis. If we saw that in a suppliers contract, we simply wouldn't sign the contract and would go elsewhere. Consider the size of your clients vs % charged.

The late payment act does allow you to apply interest charges at a set interest rate (although not sure if you need to have something in your contract to allow for this?)

Brilliant advice for me! Thank you so much!