At 01:34 AM 11/23/2001, Mark Maunder wrote:
>Matt Sergeant wrote:
>
> > Step three: Once you've given them 90 days after date of invoice, get a
> > solicitor (not a barrister) to draft a threatening letter. It'll cost you
> > about $100. I'm afraid you'll have to give them another 30 days at this
> > point.
> >
> > Step four: Get a lawyer. Sue. $25,000 is not to be sniffed at.
>
>What many small companies and one man operations dont realise is that debt
>collecting is an art. Also, some large companies (large banks in particular)
>have a policy of 'If you want to do business with us, we take 60 days to pay.
>It's all about keeping the cashflow on their side.
It depends on the company, I think most take a long time to pay the first
time because it's the first time you are being entered into their computer
systems, contracts get signed off completely etc..
Of the large companies (banks included) we work with this is normally the
case (a 60-100 day to get paid the first time), but subsequent times are
usually quite easy for us as most of our large customers repeat back to us
and we are already in their system for getting paid by their accounts
payable department.
Of course, there are exceptions to the rules, but I don't see large
companies just arbitrarily trying to pull a longer cycle. At the least,
they do usually have to wait for the accounts payable cycle and cutting an
out of cycle check is a pain in the ass, but that comes sooner than 60
days. I think 60 days etc is reasonable if you are on a 1M-2M contract,
but if your contract is a few hundred K over a year, it hardly will make
that much of a collective cash flow dent to warrant it being worth their
policy.
By the way, if you are really working for a bank and cashflow is an issue
for you in 60 days you can also ask the bank what business banking services
they offer. One popular service with small businesses who have large
companies working for them is invoice factoring which allows you to sell
your invoice (if your company passes a credit check) to the bank for
something like 80% of the face value of the account and then when the bank
collects the invoice you get the rest minus interest and commissions.
It's unlikely that they would grant the same credit with a 1-man company
though. And I think they don't like dealing with service businesses. It's
usually more for dealing with suppliers with real inventory where the main
thing that can go wrong with an invoice is a pricing dispute over a line
item of widgets I suspect.
The other thing is that if you do a contract, build in billing cycles.
20-30% up front on a fixed fee contract is not unreasonable. Of course, you
may need to commence work anyway before getting it if they are a large
company that is having trouble getting you in their system, but that is the
risk. But in any case, you can soon usually figure out whether they are
going ot be paying your schedule or not.
If you are just a normal hours-based contractor, then it's a bit more like
getting a salary and so I think it is much harder to argue to be paid up front.
>I did some work for a certain Linux distributor in the UK recently and they
>took 100 days to pay after much harrasment. If you're small you have to be
>tough - put the geek aside and become that vicious old lady that is usually
>hired to badger late payers.
The same all over the world. ;)
Later,
Gunther
