Collecting in debts

[GrumpyOldHorsewoman]

DH and I started a Ltd co almost a year ago and have quite a substantial debtors list already.
At the end of May, I invoiced out almost £49,000 to customers as monthly invoices. We have been paid only £6,000 of it so far - not enough to pay the wages, never mind anything else.
We provide a specialist service and cannot be paid in advance due to the nature of the business, but it's getting harder to meet the bills. We have very high overheads - wages bill of around £10k per month, rent £9k per month, taxes around £8k, not to mention all the other stuff we have to pay for (at least another £12-£15k).
I am at my wits end trying to think of ways to call in the debts and have this morning been going through the wages list working out who to pay now (on time) and who can wait a day or two longer.
Any suggestions as to how to get debtors to pay up? Some customers owe me money back 4 or 5 months. We keep asking, but only get dribs and drabs 'on account' from them.

Are you doing work for individuals or companies?

You say you cannot be paid in advance...could you perhaps ask for an upfront deposit (a % of overall projected costs)?

We are working for individuals and cannot get anything up front because charges are so variable month to month. Also, it's a very traditional business/sport where we rely heavily on customer goodwill just to survive.

Hmm - tricky situation.

Presumably you chase up? What do people say?

Might be a completely inefficient way of spending a day, but could you call 'round to pick up payment in person (with advance notice of course). Or talk to people about working out some sort of payment plans so they're paying something if they don't have full amount owed to hand?

For future: could you work out a way of accepting credit cards for payment so then the card company could chase them?

Any way you could reduce overheads so the financial pressure is not so great?

I would say - either get tough and only do work for those prompt payers (I guess less clients=less wages??) or appeal to their better nature and spell out how bad it actually is.

Is the credit control something you could delegate to anyone - or is it all personal contacts? It might be easier to hand it to a 'stranger' then they could be more 'ruthless' than you? I know from experience that there are 2 ways to get paid - by being really tough and top of the client at all times - phoning a couple of days before month end chasing payment for the 1st of the month. Or being really nice and friendly and a personal touch - the accounts dept will push you up the payment list if they like/know you.

Maybe give business support a call at HMCE and ask if you could delay payment - a couple of my clients have had to do this and they've been extremely helpful.

Thanks for the advice. I particularly like the credit card idea.
We have a fixed client-base (ie working for the same people each month) and as the business is horses, it is impossible to withdraw services - obviously I'm not going to stop feeding/riding out someone's horse because they haven't paid yet. If they remove the horse, we have very little legal chance of recovering the money because of rules governing the industry (we can't legally keep the horse in lieu of unpaid bills). Our customers are spread far and wide, including many overseas and I've done as much as I can to collect in money. I've written letters, produce statements each month for those who are particularly tardy and get DH to phone sometimes - you have to be very tactful because we need to keep our reputation and a pissed-off owner could make life difficult. I have spoken to HMRC and, while they were quite helpful, they still want me to pay £3k per month on top of what I am accruing monthly, thus clearing the debt within 4 months. If everyone paid up, I could do it easily and have enough cash left over for a really good cushion. It's just so frustrating.

Are there any forums out there Grumpy for your industry - maybe get some tips from them how they prise the money out.

When was your last price increase - could you introduce one now - but offer early settlement discount?

I'd investigate the legal process you would follow for collecting debts a. in the UK and b. for overseas debts. Know how it's done off by heart and then set aside a certain number of days and get DH (if he's the best at it) - and soley concentrate on phoning round and really push people to pay - and get tough. And threaten legal action - either by being the good cop or the bad cop!

Most customers pay whoever they need the most and who shouts loudest! Very few pay on statements and or letters if they aren't followed up - unless they need the goods and they are put on credit stop.

A customer shouldn't get pissed off if they owe you money.

My sister now sends out invoices with a note saying that any invoices not paid after 28 days will attract interest at x%.This seems to concentrate her customer's minds wonderfully.Maybe doing this in conjunction with a reduction / discount for early settlement may improve things.It is hard though,I've had people owe me 3 months money before and trying to get the money in without upsetting the relationship is a nightmare.

I take it you are in the training side of things?

I don't know whether you can or not but I am sure I have read somewhere that in non payments of debts then you can sell the assets that you have to meet your debts.