Self Employed-invoicing problems

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DH is self employed, sub contracting through a couple of different companies. Work fluctuates in his field and currently about 75% of his work comes through a small, one man band type company. Basically the issue is the guy never pays DH's invoices on time and it's causing us major problems. He currently owes us £1100 all of which is overdue and he's pleading poverty and claiming he's awaiting payment from customers before he can pay DH. Meanwhile our direct debits are bouncing (incurring a £6 bank charge every time plus late payment fees from utility companies) as my wage is having to cover food and fuel for DH to get to the jobs he's now not being paid for and there's nothing left over for bills. Its causing us so much stress and the guy who owes us seems entirely unconcerned about the position he's putting us in. His wife deals with his invoices and he keeps using the excuse that she can't look at them for us because she's away on holiday, they've been abroad 3 times in the last few months and always seem to be away for weekends so it very much feels like rubbing salt in the wound when we can't even pay our bills because he can't/won't pay DH. I should add that his business is reputable and has been running for many years so it's not that he's a cowboy, he has other sub contractors working for him but no one DH knows so no idea if others are having the same issues. DH is trying his hardest to get work from other places in the hope that he can just stop working for this guy but there's very little about so he basically has us over a barrel. In addition to the worry over the bills all of our DD's birthday money (less than 2 weeks away) and what we've budgeted for Christmas is dependant on invoices being paid by this guy (DH has purposely worked extra hours to pay for presents) and the worry that he won't pay on time is making me ill. DH is fairly new to being self employed and we have no idea what recourse (if any) we have for late payment other than obviously small claims court if things get to the point where it looks like he isn't going to pay at all. Trouble is that doesn't help us in the short term, we're on a tight budget and never seem to be able to get in front of ourselves because by the time any money comes in we're behind with all the bills and it all goes straight back out again, if he would just pay on time we might be in with a chance but things are about to get even worse as he's now changed DH's payment term from 30 to 60 days as he says it takes that long for customers to pay him. Does anyone have any advice on how we can apply any pressure to get him to cough up, we don't believe he has any cash flow issues or he wouldn't be able to afford the holidays etc so it just feels like he's being either half arsed (at best) or deliberately withholding payment for his own benefit. There are few overheads to his business and what he pays DH and his other sub contractors is a fraction of what he gets for each job so there's really no excuse for him to put us in this position. Sorry this has turned into more of a rant than a request for advice but I'm just so frustrated and don't like to keep going on at DH about it as it really isn't his fault and would just make him feel worse. He works so hard and is really good at his job, he deserves so much better than this. We know long term the answer is to source work from elsewhere and cut ties with this guy but that will take time and we need to live in the meantime.

The only ways to apply pressure are the ones you have mentioned - keep hassling him for the money and appealing to him that you need the money. Don't be embarrassed to keep asking over and over and make a nuisance of yourselves. Ring, text every day, write emails, go see him etc.

If he gets any further behind then you might have to say you will go to small claims court - just because he has holidays doesn't mean he has a lot of money, some people just rack up the credit card bills etc. You will have to decide how much you are prepared to risk before you do this because you could end up being taken for a ride if he goes bust - maybe all the other guys are being paid.

The only other thought would be if your DH could partially complete some work or put himself in a position where they really need him and then say he wont finish it until he is paid. Depends what he does really.

Hope he finds some other work soon so you don't need this one so much.

Right-

1. every single day call uo chasing payment, dont just ask for days, ask TIMES. Phone up 5 minutes before asking is payment being processed and 10 minutes after shes said shes doing it. Ask for confirmation as soon as its send (online banking screen shot)
   'Who physically processes the payment' - if not the wife then ask for contact details of the accountant/whoever. Ask can anyone else do it? Every single day. They will soon get fed up and just pay to avoid the hassle.

2. can your DH withhold work, is this man relying on something particular from DH or can he be easily replaced. Refuse to work until paymeng is make in full.

In future

3. Ask what their payment run process is (frequency, criteria, dates process begins/ends) ensure you meet their criteria exactly. After invoice has been send phone up to confirm theyve rdceived it and if theres any query. If they start preparing the run on the 15th- phone up on the 10th to ensure your invoice will be included. Call every day from 15th to ask paymeny run status and again 'when, times, dates, what happens next' and follow up on every single one of those times.

They will kearn its not worth mucking him about as hes a pain in the butt so will just pay uo on time

3. include statement at bottom of invoice stating any payments overdue will accrue statutory overdue interest

Good luck

Sorry broken keybored

Agree with some of the points above (dh desks with this a lot).

Withholding service tends to focus the mind. Dh don't continue doing work for people with long outstanding invoices and in some cases has threatened to take people's websites down (this is his area if business).

Also add interest to future invoices although in practice difficult to enforce and they tend to ignore it.

Finally rather than small claims court pass the debts to a debt collector. They do the chasing and it harasses people into paying. But of a last resort though as it's but exactly good for client relations and you also lose a percentage to the collection agency.

Thanks for all previous advice, have been doing as suggested and payments have been coming through a little quicker although still later than due dates. As a long term solution DH sent him an email today stating that all future invoices would be subject to a late payment charge and interest charges at the statutory rate. The response has not been good, he rang DH a few minutes ago, obviously drunk and ranting that DH was out of order for 'threatening' him and has now said he will not be giving DH any more work and that he won't pay the invoices we have outstanding which amount to £1300. He claims imposing late payment charges is not 'the done thing', does anyone have any experience of whether he's right or not? DH researched his rights as a subcontractor and acted accordingly but just want to check the charges are common practise and he hasn't committed some kind of professional faux pas. We will of course be pursuing the amount outstanding through the small claims court assuming he doesn't back down in the sober cold light of day but dont know how long that's likely to take so we could well be in the shit short term. Again, does anyone have any experience of small claims court and know how long it's likely to take? Also can we claim for invoices which aren't yet due on the basis that he's said he won't pay them or do we have to wait till they're overdue to start the process?

I impose late payment charges on companies who take the mickey.

If you send a proper Letter Before Claim you may find he realises you are serious & panic.

Does DH have a contract with this guy? Does that mention late fees?.

I do charge late fees on invoices for freelance work but I wouldn't dream of randomly introducing the idea to an existing client without discussion, that'd be really frowned upon in my industry. It'd be a contract change, for me, so I'd have approached it gently as an incentive.

Do you have a back up plan if DH isn't given any additional work from this man?

No there's no contract whatsoever, the guy involved (I'll call him Bob on here) obtains work from his customer, gives details to DH who does the work and then invoices Bob for his daily rate so it's all done on a fairly informal basis. DH has been warning Bob for months that the current situation with late payment can't continue so it's not out of the blue, Bob changed invoicing terms from 30 days to 60 with no prior warning so think DH has been more than fair tbh. DH does have other work coming in which is building in quantity so it's not as bad as it could be, he won't have continuous work without Bob but we'll just have to redouble our efforts to get work from other sources to cover the shortfall. He was intending phasing Bob out anyway due to all the problems we've been having with him, this just means it's happened a little sooner and more abruptly than we'd planned.

The one that works for me, is to find out who it is in charge of the accounting and speak to them. Know their name, number and email address. If you go in, always go and say hello if you can, develop a relationship with this person. In fact in one case when I went to my clients office I used to go to his in tray, retrieve my invoice and hand it to the lovely woman in bought ledger. And then I'd get paid.
I seldom have any non payers, nowadays.
I ask for 1/3rd upfront, this is accepted in my trade, don't know if it would be in yours. This weeds out the 'won't pay ever.' type of client.
I write a proposal out with every stage written and I ask for a payment at each stage and don't commence the next stage until that is done.
I make them sign a contract which outlines fees for late payment.
I try to avoid situations where the owed amount builds up to a large sum. Twice I've done this and then not got paid. It really hurt.
It really doesn't hurt to micromanage it.

Does your dh do monthly valuations?

Changing terms from 30 days to 60 days nett is unacceptable.

A friend of mine works self employed.

He has a rule. If they dont pay on time he does no more work. If they still don't pay then he goes to court. He has no late payers.

This response you should write down as evidence "and has now said he will not be giving DH any more work and that he won't pay the invoices we have outstanding which amount to £1300."

DH should do no more work and write a letter (recorded delivery) demading payment with the amounts itemised and saying what the due date is and that payment is expected within 7 days or court proceedings will begin and that interest is being added. and costs will be claimed.

Small claims court proceedings you can bring yourself and the clerk of the court will help you fill in the forms.

I wish we could micromanage it sminky but Bob's company is a one man band operation run from home, his wife apparently does his accounts and has a full time job on top so if we ring in the evenings we just get Bob who trots out the same old excuses. DH has spoken to someone else in the industry who knows Bob of old today, he says it's not the first time he's flipped his lid and ruined professional relationships while drunk so we're patently not dealing with someone where normal rules apply. DH's contact seems to think we'll see some kind of climb down and apology in the next few days so I'm hoping we can find an amicable way to get the money he owes before we cut ties completely. It's definitely time to move in though, dealing with someone this volatile and irrational isn't good for business or our stress levels.

Monthly valuations don't really apply in DH's line of work balletgirl, don't want to name his trade as it could be too identifying but it's not construction and there is no outlay for DH other than travel expenses. He only agreed to 60 day terms because Bob was using customers paying late to excuse DH getting paid late and we thought waiting 60 days but being able to rely on a definite payment date was better than expecting payment in 30 days and being let down, at least we could budget for bills etc accurately that way rather than thinking we could pay stuff on a particular date and being let down. Bob led us to believe 60 day terms would ensure payment on the due date rather than 2 weeks late. That's useful info ABetaDad1 thank you, Bob is the only one we have problems with so haven't had to implement a system for late payers up til now but that sounds a good way of doing it. Am hoping it won't come to small claims for what he owes but am researching the procedure for if we do, thanks for the tips.

My advice would be do no more work for him. It's better to be on the phone pro-actively looking for other work than work for nothing. 60 day terms fir ad hoc woek is pretty unusual in our industry (construction) and we have been burned in the past with non.payera so the maximum we will expose ourselves is 30 days and it's usually fortnightly or weekly.

Recober the debt hard and move on to.new.clients.

That's the plan bimandbam, last night's phone call was the last straw and proof absolute that Bob is not someone we can continue to do business with. We've made a good start today with sourcing other work and would much rather continue to put in the legwork with finding new work than stay on this roller coaster with Bob.