Sporadic Payments From Large Company

bowlingo

Hi all,

I work within the construction industry and 90% of the work I carry out is for a very large company (8000 employees across the UK). I always post my invoices on a weekly basis and they make a payment anywhere within two to eight weeks however there dosent seem to be a pattern in the invoices they pay out for and seem to pay me randomly...Sometimes I might get a couple of thousand one week then a week later another couple of thousand. Other times they wont make a payment for weeks and weeks and then its a minimal amount. For example the latest invoices I am currently owed were submitted on the 24/4/09 and I am owed around 20K at his particular point. So when I calculate whats owed to me and what I owe out to suppliers etc I can see what im worth but due to the continuously owing me large sums it will never catch up.

Today I looked into invoice factoring and contacted a few companies but due to these companys having a minimum fee each month (RBS £600) and large set up fees factoring only seems viable for companys of around a 250K turn over.

Im wondering if anyone has any advice in relation to how I can improve my cash flow i.e overdraft etc and if anyone can provide me with advice on the rules/laws on when companys are supposed to pay submitted invoices?

Due to the company being so huge its near on impossible to talk to the relevent department regarding how much and when the invoices are going to be paid and due to 90% of my work being carried out to them I cannot upset them with threats of legal action etc etc as they will simply stop using me as I dont have an official contract with them and if I were to lose them I would be well and truly screwed in the current economic climate.

Thanks in advance

Savvy_Sue

You could try sending monthly statements making it clear what's overdue - 30 days, 60 days, 90 days.

Also some of the invoices we pay state that there's a 5% surcharge for payment after 14 days.

YEOVILGOM

A few points:

1 90%of all your work with one company is scary and unsustainable. However, I appreciate it is easier said than done to change this at the current time. However, what ends up happening as in your case is that you are no longer dictating terms to your customer, the customer is dictating terms to you.

2 I am no expert but think you will struggle with factoring as they hate to see a small number of customers taking up a big percentage of your turnover

3 What are your payment terms? Not when they pay you but when your T&C say the invoice should be paid?

4 "Due to the company being so huge its near on impossible to talk to the relevent department regarding how much and when the invoices are going to be paid" Sorry, don't accept this. Normally within these organisations there is a girl (or boy, man or woman!) who puts invoices through for payment. The trick is to find her and build up a relationship. You want to be able to phone her and be on first name terms to say - "Hi, did you get my invoice? Everything OK? When is it going to be paid then? Not till then, go on can't you bring that forward as it's me?" If you need to go to the business ever, go and see her, buy her a box of chocolates - anything so that when your invoice goes across her desk she remembers you as that nice guy who she wants to pay!

5 "cannot upset them with threats of legal action etc etc " If you set your self up a credit control policy you should not need tothreaten them. This means spending time to talk to them - I cannot see anywhere in your post that you have ever tried to find out why payments take time


Geoff

Essex-girl_2

Hi

We are similar to you and sub contract to a mult national blue chip company, however in the UK only 2 people can authorise payments and if they are both off then we didnt get paid.

I had to go down the factoring route & looked a lot of companies most of whom wouldnt touch us as have 1 large client. However LTSB commercial services were happy and have one of the lowest charges of the companies I looked at. You also can cancel at anytime with a months notice but be warned - once you start debt factoring it is very hard to get out of.

Now it is an expense each month that I would like to reduce but being truthful if I had not taken it out last year we would have definately gone bust.

I was introduced to them via Business Link which I found very useful.

YEOVILGOM

Essex-girl wrote: »

Hi

You also can cancel at anytime with a months notice but be warned - once you start debt factoring it is very hard to get out of.

Very important point and worth repeating!

Horace

You need to have proper payment terms and that way the customer knows where they stand. If they don't pay after 30 days, ring them on say the 32nd day and politely remind them that the invoice is overdue for payment. If they still don't pay then ring them again, still be polite and a bit more forceful.

In the meantime, see if you can get some more customers because it is a dangerous situation to be in if you only rely on one customer who by not paying bills on time and can force you to go bust.

anniecave

have you asked for a specific named contact to send them to (if you dont have one already)
someone who can get the invoices authorised and passed for payment in a timely manner

Check they don't have a purchase order number system and therefore you should be quoting a PO number on the invoices

If you don't personally want to do the credit control then ask your spouse/partner/sibling/parent/child/friend to do it for you. They can just say "I'm calling on behalf of x ..."

YEOVILGOM

anniecave wrote: »

If you don't personally want to do the credit control then ask your spouse/partner/sibling/parent/child/friend to do it for you. They can just say "I'm calling on behalf of x ..."

Or me? !

Murphy_The_Cat

Essex-girl wrote: »

I had to go down the factoring route & looked a lot of companies most of whom wouldnt touch us as have 1 large client. However LTSB commercial services were happy and have one of the lowest charges of the companies I looked at. You also can cancel at anytime with a months notice but be warned - once you start debt factoring it is very hard to get out of.

LTSB also offer a halfway house version of factoring called invoice discounting. You still do the credit control and it is a bit cheaper.

Invoice discounting/factoring isn't cheap, is a LOT easier to get into, than leave, but it is VERY, VERY useful, especially if you have a fluctuating cash flow. One other point that hasn't been mentioned is administrative accuracy -- your sales ledger & day book needs to be 100% accurate. Any discrepency whatsoever (even a 1p) will mean that you can't 'report' and you won't get access to your funds.

schneckster

I have to say, with respect, how the hell are you still in business? And aren't you fearful, particularly in the construction industry, of the consequences of your customer going elsewhere? Constructors are pulling out of projects or going bust left right and centre and you've got £20k of outstanding invoices with one? No offence, here, but I'm staggered!

A friend of mine had a haulage company. 75% of his business was with one customer. The transport manager of that customer left and his replacement gave the business to his own friendly haulier. Result? My friend went bust putting 15 people out of work and him in a huge amount of personal guaranteed debt. It's all too easy for things like this to happen, and believe me, your customer won't think twice if they decide it's a good idea to let you go.

So, the first thing you must do to survive is reduce their 90% to no more than 30%. Get more customers as soon as possible!

But in the meantime, do what other posters have suggested and make your credit control more robust. Issue statements, add charges for late paying (HMRC site suggests approx 2% per day overdue) and admin charges after 60 days. And get a contact. A "not taking any crap" type conversation with your normal contact will usually get you somewhere without you upsetting them.

You've got to do some straight talking with them. The alternative really isn't worth thinking about.

Best of luck,

Schneckster

YEOVILGOM

schneckster wrote: »

(HMRC site suggests approx 2% per day overdue)

I wish - 2% per day would increase £20k to £35k after one month!

This site will tell you what you need to know about Late Payment legislation.

But that is not the issue in this case. You need to sort out your credit control and customer mix - in that order!


Geoff