Late payers

System
System Posts: 100,537 🤖 Admin 🤖
edited June 9 in General accounting discussion
I am getting increasingly irritated with my clients who are persistently late payers :(

Does anyone else have this problem - or any tips on how to deal with them?

It is always the same people, with the same lame excuses - one of them came to see me today - I had said that he had to come and collect his VAT return from me and pay at the same time - turned up without his cheque book - what a surprise - promises to send a cheque off tomorrow....

Any help, advice - or even just being to shut up and lump it :shock: would be most appreciated!

Claudia

Comments

  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Late payers

    Hi Claudia.

    Apart from taking payment in advance, or witholding documents - what about charging interest, this might hurry them along and compensate for the delay.

    Scott.
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Late payers

    Charging interest I threaten to do in the extreme, but doesn't exactly help client relationship!

    Could I really withhold their VAT return/tax return until I had received payment? Is that ethical? :wink:
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Late payers

    Our practice operates a standing order system which means that the client is always in front with their fees. They simply pay a set amount each month based on their annual fee - this has worked for us for the last 8 or so years so maybe that's worth a try.

    Charging interest could mean losing clients (even though it's the client taking the processed water out of you) - maybe worth a try?

    Regards
    Steve
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Late payers

    Cheers guys for your thoughts - its only a few but the same few each time - and I am beginning to get a bit processed water'ed off with them!

    Many thanks

    Claudia
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Late payers

    Hi Claudia.

    If you had their payments in the bank you would be earning interest on the money, I think it is reasonable to levy a small interest charge.

    Scott.
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Late payers

    Funny you should post this...

    I saw an invoice from another accounting practice yesterday and what they do is this.

    fee = x
    vat = x
    gross = x payable one month from today

    interest = x

    new total = x payable should the above be overdue

    Along those lines anyway...

    All of their original invoices go out like that. This way, kinda eases the whole "im charging you interest" because they know about it from the start!

    Something else to think about.

    Regards

    Dean
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Late payers

    I have thought about this for a client who needs figures for child tax credits.....


    "Last year, my invoice remained outstanding for 2½ months. As you are aware, my terms are strictly on receipt of invoice. Accordingly, this year I will not complete your tax return until the enclosed invoice is paid in full."

    Too harsh? Any thoughts appreciated, as it is going out in the post a little later on - amended or not as the case may be!!!

    Claudia
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Late payers

    Dean - does it say how the interest is calculated - because the statutory interest is calculated on a daily basis and compounded - so would change depending on many days late.

    Maybe it is £x per month?

    Claudia
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Late payers

    They were doing 5% on the total bill.

    Regards

    Dean
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Late payers

    Ouch! I wonder whether it works or not. If it were me, and I couldn't/wouldn't pay within the 30 days, then you might as well string it out - once you've had the 5% added, then you might as well not pay for 3, 6, 9 months..

    Sent letter off to client - dont care if I lose him -always a bad payer, always late (has 30.09 year end date, and I only got books 2 weeks ago grrrr :evil: and now needs figures for child tax credit.

    About to give up for the day, and see if I still have any children.... :wink:

    Claudia
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Late payers

    Yeah there is that and I do agree with you.

    Like i said, its something else to think about... you'll develop something that meets your needs.

    If you do ever find a way to get a client to pay quick, please let me know!

    Regards

    Dean
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Late payers
    peugeot wrote:
    Our practice operates a standing order system which means that the client is always in front with their fees. They simply pay a set amount each month based on their annual fee - this has worked for us for the last 8 or so years so maybe that's worth a try.

    Charging interest could mean losing clients (even though it's the client taking the processed water out of you) - maybe worth a try?

    Regards
    Steve

    Hi Steve

    How does this work? Do you hold large or small clients?

    Why I ask is because I don't think personally I could warrant doing it this way. As a small fry I have clients that require quite alot of support and if I were to set up a standing order of X per month I'm sure they would think they have paid me for everything! So when I produce an additional bill I would be always be having to justify it.

    Do you ever get caught out like this?

    Regards

    Dean
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Late payers

    I have to say that most of mine pay up like lambs - I find that taking their stuff back to them, getting them to sign whatever and asking for a cheque at the same time - most of them will do it - just a few awkward ones - most of whom are not very solvent anyway, dont want them but ...... :-o

    Claudia
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Late payers

    I have a few like that but as they have been with me since I started out being there bookkeeper I now feel obliged.

    Regards

    Dean
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Late payers

    Exactly - my ones are the ones that I have had since I started and somehow well "there's history" I suppose - not good business practice though!

    Claudia
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Late payers

    Dean - I agree with you about the SO route. I do quite a lot of VAT on fixed fee basis and all accounts that way, but if they suddenly ask for something else - business plan etc - then an extra bill on top of SO. Also there are the ones that always seem to call about something :roll: and I need to be able to charge for all the little 5/10 mins here and there when I am not doing what I am supposed to be doing!

    Claudia
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Late payers

    Your right it's not good business practice but when I made the move from bookkeeper to accountant I was wise to the fact and if you like set down some ground rules before I took things on properly. i.e the ownes is now on me whereas it wasn't as the bookkeeper.

    As i'm not vat registered at present, I charged what the previous accountants did enclusive of...

    I don't mind waiting an extra week or ten! :wink:

    Regards

    Dean

    p.s regarding your other post.

    That's just it, someone can phone send 10mins or so on the phone, stopping you from the middle of a tax comp.... thought turns to something else and you need to start the comp again with afresh...... grrr :twisted:
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Late payers

    Hi you guys. I'm just coming in on the end of this but here are my thoughts anyway.

    My background is more on the commercial side (rather than practice) and I have done a huge amount of work with credit control and now it's a service I offer. It really is amazing how different it is when you are trying to get your own money, rather than that of a big corporate. We want to be on friendly terms with our clients, but asking for money just isn't very friendly.

    Here are some of the tactics I use:
    Ask your client face to face for the money - it's harder for them to say "no" or tell fibs.
    Ask them questions beginning with "W" - "When will you send the cheque", "what is the cheque number", "How much are you sending" "why haven't you paid" Try to ask these questions with a smile.
    If they don't do what they said they would, contact them straight away. With new clients, if they are even a couple of days late with a payment, let them know you've noticed. If you give them a couple of extra days, or let them get away with the odd £10, they won't take you seriously.
    If you know they're struggling - offer them payment terms.
    If this doesn't work, put them on stop - don't take that call, answer that email, return those papers.
    If that doesn't work try Thomas Higgins!
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Late payers

    Just as a Friday afternoon ps to this thread. I did send letter out saying wouldnt do tax until I had been paid. He phoned me up this week, and asked if the net profit was the figure that went on tax credit form. I said no (but didnt tell him that he only needed to take depreciation out!! :lol: ) and guess what a cheque turned up in the post this morning - it seems that bully boy tactics work :lol:

    Have a good weekend all.

    Claudia
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Late payers

    This is slightly off track, but I would be interested to know what other people would do when handing over the records of a slow paying client to a new accountant or bookkeeper.
    I have recently been in this situation, and although I was (eventually) paid in full, I feel certain that my successor will suffer the same problems. I am also sure that he has not asked me to continue because I have reqeusted part payment in advance and a standing order for the remainder.
    I took a deposit from this guy when I first met him, and from this experience I have learnt to look first at how a new client treated their previous bookkeeper and accountant. We have to respect confidentiality, but what do you do if a successor asks you blatantly "what's his payment history like".
    Do you simply say "no comment" and hope they see the hidden meaning?

  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Late payers

    I would suggest keeping the records until he paid - letting the next advisor know that you will send them the minute you receive a cheque. This will then alert the advisor to the fact that the client isn't the best payer in the world, and hopefully they'll do the chasing for you as well, as an added bonus!
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Late payers

    I agree with Lilibet - it speaks volumes to the new accountant :lol:

    Claudia

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