Receivables Rant!

Blazin_sl said:

As a business owner I hate dealing with receivables, some customers make it so easy they just do what they say and pay with no hassle at all. Now I have a client who is months past due and owes me over $300k now telling me "oops we lost the invoices" This is the kind of shit that can drive you batty and not want to run a business. So any of you looking to start a company stick to a cash business! Ok rant over

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If you can do cash. A lot of my customers are affluent or business owners, and they take their damn time paying. Anyway, I've been shocked, that this year 100% of our customers have paid other than a small $50 stump. Not bad given my revenues.

Why did you let a customer get into you for 300k? We don't do any work for anyone without getting paid on a previous job. It sounds like you need to tighten up your credit practices alot. A customer of mine won't get into me for $500 and get an extension.

Blazin_sl said:

It's a customer that Ive done about a million in sales with over about 4 years prior to this and they were always good for it. So now I've let it go longer than I should have, even now though it's not the owner that's the problem its totally incompetent employees. Trying to get a hold of the owner now and get this shit straightened out. Wanted it dealt with before the weekend so I wouldn't have to spend it worrying about this.

They just contacted me a couple mins ago offering me $50,000 now and the rest in early Jan., which still seems unacceptable. In my line of business I could never be that strict about invoices, I mostly deal with huge corporations so its not usually an issue of "IF" i'll be paid but a matter of when, and with how much BS attached to getting the money.

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Don't let a customer get into your ass like that. By the numbers you posted above, they haven't paid you in a year. Tighten that shit up dawg.

I work with large corporations (think Fortune 10), as well as muni's, but I've still convinced them to pay me in less than 45 days. We make it a point to call customers once week that are over 30 days due, at 60 days we send them legal notice. This doesn't change whether it's a $100 or 100,000 job.

Your CPA didn't notice this ten months ago, didn't warn you of the problem or even address this. Fire his ass post haste.

You don't have cash flow problems with 300 grand late?

I was a stockbroker most of my life, someone didn't pay on time they sold him out and and hit my paycheck for the loss

They are always a good customer til they fuck you.

Blazin_sl said:

Yeah I would list it as my biggest business weak point I try to be too nice to people and I don't like conflict, I should have been hounding them a longtime ago. I have a CPA on staff and I really shouldn't be dealing with this crap in the first place. I need someone else to be the pain in the ass.

Some of my top clients are ConAgra, Kellogg's, Kraft, Pepsi, and Coke and pretty much all are around a 60 day pay. It's the oh we never entered that invoice on day 57 that I'm tired of, then telling me clock will only start at that pt even though it was their screw up.

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Without knowing how big of a company they are, I would say to look into anything you can about how the business is doing currently, especially if they are trying to jerk you around on payments.
I'm in commercial collections, I see lots of money end up written off because a once good customer fucks over a creditor because they know they are going under and try to save themselves at everyone else's expense.
Some of the clients at my office are huge companies, and it's amazing how long they let people get away with it.
I end up getting 6 year old invoices from some of the bigger players in their industry because they were believing and tried to be nice.

While maintaining a customer base is important, they have to pay to remain customers, otherwise they are just debtors.
You have to find the happy medium and it sounds like this client of yours is fucking you the best they can.

And really, the biggest companies are some of the slowest to pay any bills, even ones that are attached to checks we collected for them.

Tmac47_sl said:

Just put processes in place that force him to be the bad cop. If an account is (30) days late, have a policy in place that says the CPA should send a letter. At (60) days late have a policy that hits them w/ a legal notice, like Lyrical said. Put policies in place so that the CPA doesn't have to bring it to you, because all he has to do is follow the "Late Accounts Checklist" on page 10 of your Operations Manual.

This problem is easily solved by putting processes in place, imo.

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Yup. Just put a policy in place, and have the CPA follow it. When people push back, blame your hardnosedness on the policy. I blame it on the policy, and no one ever questions it. I'm the owner LOL. I can change policy at will. Right now, my customers are into me for 40k, which isn't horrible since it's all under 60 days.

You might go meet with the customer to talk them about what they owe. Since they know you have them over a barrel, talk about your new receivables policy. See if it's something they can live with (<90days?). Take the 50k, and raise hell if you don't get the other money in the agreed upon time.

You can go broke making money. We all learn that in Accounting 101. It's not a profit if they don't pay you.

Can they get what you offer them elsewhere and how easily? I had a customer who was late more than 30 days on a regular basis. I let it slide since they were an almost insignificant part of our business and I knew we were a major part of theirs. The day they hit 60 days late on the latest invoice we quit doing anything for them. I told them in the future any work we do for them would have to be prepaid. I"m about 99.9% sure they will come back and prepay in the future. If you have lots of competition probalby not an option however.

Glad to hear it was sorted. Set a policy for an aging process on delinquent invoices and have your accountant stick to it.

Blazin_sl said:

Was paid now to give half of it to Uncle Sam!

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That's a nice Christmas present. Also, talk to your CPA on how to deal with the tax ramifications soon.