"contract" work always pays late

Adam Gabriel

We do work for a company and they pay late after every job. Have 3 open invoices from last month (august) and one invoice from March that is still open. We are supposed to get paid one week after drop off and this continuously happens. They're roughly 10k behind right now, I have 2 more jobs supposed to be delivered by the end of this month for another large amount

They are a "family" owned business and know they have a lot of overhead, so I see their side which is why I always keep going back and doing the work (plus it pays wells, when it does pay)
How can I be nice about implementing something but not pushing the business away for us to never to do work with again (even though im sure it would be extremely difficult to find a replacement with what we do for them). I would be fine with net 30, but seems like they cant even do that.

Every job I start for them, ill sink a couple grand in materials. Ive asked for deposits which worked for a little then when they get slammed, theres no time for deposits, due dates on the job are more important.

They do have slow periods and do have times where they hand me checks twice a week when business is going well for them. What can I do without losing them? Im sure other businesses they deal with have some sort of late payment or type of interest added to the invoices.

Thanks

Fred Mattson

Problems can only be overcome with communication. Ask for a sit down meeting with the owner or contact person that places the orders with you.

Do not act confrontational with them but try to get an understanding that you need to be paid for the work that you do. Let them know who much you appreciate doing business with them and that you understand that cash flow can be spotty at times. (The whole reason your in this situation)

Ask if there is a way that you both can agree upon some kind of resolution to getting paid. If you are willing to extend them some time to get current that could help them get you paid on a schedule.

If you are loosing money, it may be best to cut ties with them. The money is no good if you do not get paid. Taking on more work will not help them or your business if you do not square your accounts. This is your business and you are worth every cent that you ask for.

Steve Ingram

Great advise Fred.

Eric Gordon

Collecting what's due to you from an erratic paying client can be challenging. They obviously know that you need to get paid however, currently they can't or don't want to. It's good that you see things from their perspective. Something to consider is that you are offering them interest free financing on their projects. Use that to your advantage on collections.You may also consider offering them a discount to pay their balance in full. That's worked for me in the past. Keep in mind if you make changes to the financing arrangements you may loose the client or have them split the projects between you and other vendors ( they may feel it's easier to owe two people $5000 each than one at $10000)

Hal Bast

I don't think offering them a discount to pay in full is too good of an idea unless you don't intend on working for them again. A discount only gives them the idea that if they don't pay, you will lower the price. The discount should be addressed prior to contracting the work. ie. 3% if paid upon delivery. You can add that 3% when quoting the job so you are out nothing there. Some places like to operate on your money, and if they are that close to going belly up, you may want to give the discount, get your money, and cut the cord before they take you with them. Just a thought.

Adam Gabriel

Thank you for all the comments and reply's back.
I have sat down with the owner once a maybe 8 months back and they cleared up their debt and now we're back to square one. This company has always dealt with these problems and I think him turning away is his natural position.

The whole interest free financing thing kills me, and I'm glad I don't have employees or else I would be screwed. I don't mind not paying myself to keep this contract work, because like i said, it pays well... when it does pay. Other companies can not be like me though, and thats my downfall. Too nice.. and not a business man. my forever fault in life

In August I emailed them to tell them about a price increase in Ultra Leather and told them if they paid up some, I would put that money towards more Ultra Leather that we need on the next few projects instead of increasing costs... Trying to be nice and would hope they would see the benefit in that. But nope, no response back or anything.

Rodger Pisani

↪Hal Bast

I agree Hal, a discount to get square sends the wrong message.... unless, as you said, you're ready to cut ties.

Peter Pittel

I had a designer who was always late. They got upset when I said I would not do the next job until they settled the bill. They then hired someone who they said was cheaper. Well 6 months later they were bringing in his work because their customers were not happy with his cheaper (Quality). Now they are one of my best customers. Sometimes you just need to be firm. My bills come due every month and if I am late it affects both my profit(interest charges) and credit.

"contract" work always pays late

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