What’s the protocol you guys use for collecting payments from large commercial clients? I’m coming up on 30 days past due on a NET 30 invoice for a $5000 bill from a massive industrial client. I reached out to my contact two weeks ago and he said that payments are processing, but he also said that they were processing the week after I invoiced.
What do I do? Do I start emailing accounts payable? Is calling a good idea? I want to remain on good terms, but it’s getting to the point where I really need this money.
Been there, it takes AP sometime to set the reoccurring payments. A month if it is reocurring. If not try asking politely that you also process CCs
Give it time.
Something I found out recently is that some big companies like to push off payment longer the larger an invoice is. A $500 bill might’ve gotten paid in the 30 days. But they like to hang onto the larger checks as long as possible. It sucks.
Another factor is that many companies require two signatures for checks over a certain amount, usually around $1000 or so. If one of the authorized signers is on vacation, or just doesn’t get around to signing that stack of checks on his desk, then that can hold up payment, as well.
I would give their AP department a polite calling asking for the status of the payment, as others have suggested.
On future invoices, you might try discounted terms for early payment, like 1.5%/10 net 30. Essentially it circumvents any benefit on their end of hanging onto the money and collecting the interest. Just bump your prices up 2% to compensate for the “discount”.
We pay at 42 days, I alert vendors to it ahead of time. Some make a request for faster payment and we are able to do so.
If you need to draft a dun letter, may I suggest you reference their good pay past is what has allowed you to help keep their cost down and you are only inquiring if they have adjusted their payment schedules so you can react according to the new dso.
Check your state laws to be sure but I will explain what is done in my state. A lien is the path to payment. This may sound extreme but it is common practice. If you are dealing with the property owner directly you have 45 days to send what’s called a NOTICE TO OWNER. And 30 days if you are through a contractor. FYI a property management company is considered a contractor in this situation.This is a certified letter stating your in a position that requires you to consider a Lein to protect your position Incase of default payment. This does not mean your leaning there property it just maintains your ability to.
If they don’t pay just keep calling and emailing and bugging. Don’t let up until you get the dough. You don’t want your money forgotten about by some accounting drone somewhere in corporate never-never land.
With my past company (nothing to do with power washing), 99% of customers were industrial. I never had an industrial client pay sooner than 60-90 days - regardless what the invoice or contract said.
I would wait until the 30 days have passed, then wait until the beginning of the next week before calling to POLITELY ask about the status of the payment. Remember that depending on the company size, the people who actually create the payments may have little to no accountability to the people who approve the contracts so they won’t be in any rush to help you out.
Ultimately don’t give up until you get paid but if you’re hoping for repeat business, be careful how aggressive you are while talking to them. If this turns into repeat business, build the expected payment ‘delay’ into the pricing for future work.
In my experience, industrial customers can be very financially lucrative but you have to play by their rules and their timing.
When my power washing starts up next year, I personally do NOT plan to do work for industrial customers.
Notice to owner letters and common practice in FL . Some companies send them out automatically. Every time I rent a lift they send a letter to the property owner or management company. Might not be that way in other states. I learned my lesson the hard way trying to be the nice understanding guy cost me $15500 . Now I have contracts signed on anything over $5000 . A notice of owner letter is in the contract.
