Improving cashflow

[Fuzzy]

Completely off-topic, but I know a fair few peeps on here are self-employed and just wondered what you did to improve cashflow, particularly those of you who provide a service rather than a product?

At the moment, I give invoices on 30 days terms (seems to be normal) but I'm seriously considering issuing 'now due' invoices in an attempt to get people to pay quicker. Does anyone do this, and do you find customers actually pay you on time/promptly as a result?

At the moment, I have around 2 months' invoices due which can't be right if I'm giving payment terms of 30 days! And yes, I do chase up overdue invoices and issue statements!

Driving me mad.

 

[abaxas]

Hardest thing in business, getting paid on time.

You have to walk the tightrope between pissing off your customers (bad for you) and not prodding enough (bad for you).

If you selling a service, you should have little or no assets, hence no need to buy anything. Is the 'cashflow' simply to pay yourself? If so, I think you already know the answer to that one

 

[bonehead]

I sold products in my business and it was a nightmare people paying. I gave 7 days credit as I was wholesale.
Some still owe me and it's 4 years down the road!!!!!
I chassed one customer and got a legal charge on her house trough the court, cost me £7100 to do it and the cost were mine as I was a company. The law is a joke.

My only advice is don't let them owe more than the terms you give them. Send a reminder and chase it up with demands.
Chances are they have a lot more money than you so are able to pay try just chose not too.

Hope you get it sorted. The softer I was with them the more the took the piss.

Just my 2 pence worth!!!
Steve2015-05-14 10:09:44

 

[backflipper]

Some companies take 30 days as being 30days from end of the month.

I have tried to get people to agree to my 30 day terms which is staggered into 3 parts but the big boys just say no we have our terms.

You can insentivise people by offering them a discount if they pay with 14days.

 

[Fuzzy]

Cheers for the replies, fellas, agree fully with everything you've said.

For some reason it's always sh*te around this time of year, probably because of the start of the new Tax Year in April.

 

[RGP]

I impose some fairly tough and I mean Joe Pesci from Casino tough rules on payment. This might sound like a joke but the maximum anyone gets from me is a few days.

After that I withdraw setvice until settled.

It's easier when you're a contractor doing IT as usually it's critical stuff so they kind of dare not pay.

In my agreement it states that all invoices are due on presentation no credit terms are given unless expressly in writing and enjoining my services accepts my terms above any corporate policy by enjoining me you are agreeing to these terms failure to comply will result in immediate termination of contract and pursuit via the courts. I also write a termination clause of 2 months normal fee to prevent a lot of messing around.

Having taken two larger corporates to court and won resulting in a manager being sacked as the consequence (the manager had power to agree and sign the contract the company hung him out). They thought I wouldn't push it.

I might not be an MMA champ, be a bit larger and have only one eye but don't mess with me on money.

Long term clients I give a bit of rope to but not much it's bigger companies - sometimes I demand the fee be put in escrow and if your gut says you're getting stung you probably are.

 

[Hitesh]

Discount, say 1%, for prompt payment always seems to do the trick for the business I work for.

 

[cosine]

Most of my customers are walk ins, so if they don't pay, they don't get their PC/Laptop/whatever back, so it's not really an issue for me

I have a few business clients who I agreed 30 days with, one told me that's "not how they do business" and insisted I allowed them 60 days. I flat out refused them, and they relented, but it's still a chase to get payment from them. If the amount they owe starts to get ridiculous, I sort of do what James does, and wait until they bring something in for repair, then hold it to ransom until they pay their outstanding invoices. Works a treat.

 

[Fuzzy]

Cheers guys.

 

[abaxas]

I impose some fairly tough and I mean Joe Pesci from Casino tough rules on payment. This might sound like a joke but the maximum anyone gets from me is a few days.

After that I withdraw setvice until settled.

It's easier when you're a contractor doing IT as usually it's critical stuff so they kind of dare not pay.

In my agreement it states that all invoices are due on presentation no credit terms are given unless expressly in writing and enjoining my services accepts my terms above any corporate policy by enjoining me you are agreeing to these terms failure to comply will result in immediate termination of contract and pursuit via the courts. I also write a termination clause of 2 months normal fee to prevent a lot of messing around.

Having taken two larger corporates to court and won resulting in a manager being sacked as the consequence (the manager had power to agree and sign the contract the company hung him out). They thought I wouldn't push it.

I might not be an MMA champ, be a bit larger and have only one eye but don't mess with me on money.

Long term clients I give a bit of rope to but not much it's bigger companies - sometimes I demand the fee be put in escrow and if your gut says you're getting stung you probably are.

Are you sure you are coming from the right angle? I contracted for 12 years and never had a late payment. I worked with not against. Starting a fight or having silly terms is just going to piss people off. Business works on 30 days(month in reality) so you'll look a bit like a 'noob' if you have something different.

The issue with 'radjie contractrors' is most people tended to get rid ASAP.

"Come in on time, work hard, then f**k off home." anything else I CBA with so I'll find someone else who can. No-one cannot be replaced and if anyone thought they were, I got rid anyways.

Reputation is everything. Make sure people always want you back without resentments. Make sure that manager phones you up, it's much easier than looking for it yourself

In 12 years I 'applied' for 3 contracts.....

 

[RGP]

Whatever works for you is fine personally I know what a bunch of p**s takers companies are having been on the hiring side as well as the working side.

I'd rather work for a company that pays up quickly than one that starves you.

I've been a contractor now for 14 years. I tend to turn down more work than I take because I prefer to be involved with innovation so mostly work for medium size.

At the end of the day you need to put food on the table and pay the mortgage - can't do that if it's sitting in someone else's account.

I would never consider myself irreplaceable but we're talking about pre-contract negotiation rather than post. Within reason I get a bit of pick and choose but no more than anyone else.

Too many of my peers are bankrupt from 30/60 and 90 day payouts and retentions - I think the noob status is more akin to those that get glitter eyed over a high fee contract, it's always wiser to play the long game.

 

[abaxas]

The long game is where it's at. Well the long enough game to not be hit too badly for tax

I used to use keep 6 months salary away for the rainy day (my god the time after twin towers was bleak). Then use the end of year 'top up' to buy cars / isa / pension / etc. Since I always 'worked away', there were loads of tax advantages too. Rent, gas, electric etc. It's often not what you earn that matters, it's how you earn it.

I guess the main issue is that lots of contractors don't think they are running a business. Just as lots of managers don't understand how contracting works.

TBH if you go bankrupt on late payments, you are not running your business correctly or are spending above your means. Might as well go back to being a permie with it's security.

 

[RGP]

Ah, the days of keeping six months salary

You're right that a lot of businesses forget you're a contractor/don't know how it works.

It's an odd place to be when you sell something that doesn't exist but the hardest part is the 1:1 ratio of earnings to work. If you sell product your ratio is different but service unless you bring in other temps is purely 1:1.

The one thing I'll reveal is that I generally end up in longer term ad-hoc arrangements than fixed term ones. Rates tend to be lower in these as the company is giving you project after project because they've found you reliable. I don't work full time for anyone ever - I've stayed the right side of IR35 throughout its manifestations thankfully.

It's odd that through recession contractors were out straight away along with a lot of other permies but the first back in the door because we're expendable - effectively we all work zero hours contracts.

I'd jump off the London Tower bridge before I'd go back to being a permie after this long.

I get an odd client who takes a week or so to pay but it's far between.

As a single entity you are your business, you have to be polite but firm and avoid certain well known groups or just hike the price up before you sell them anything.

 

[IDCHAPPY]

Folk can be right shytehouses about paying bills...