January 26, 2011
Terms of payment and clients system of payment?
By Planet Wealth
Out trade terms of payment for our small commercial electrical business are 7 days with 15% interest after 30 days. We have a lot of clients and are not small of work. We also are available 6.00am till 10.00pm 7 days. We wait the first 30 days before warning the client they will be charged interest via email unless they pay. We haven’t charged interest yet as we really don’t want to, hoever it is getting to the point where we feel we must. Some clients computers are on a set cycle of payment – that is, the 30 days of payment is counted not from when the job was done in the month (say the 15th) but on the last day of the month (the 30 or 31st). It is then automated to pay electronically on the 30th of the next month plus 7 days. So therefore, if the job was done on the 15th April, we are not paid for it until the 7th June. Is there anything we can do about this? Sometimes it is a large bill and it seems unfair we have to wait 45 plus days. We don’t want to offer discounts on our work.
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One Response to “Terms of payment and clients system of payment?”
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January 26th, 2011 at 10:20 am
In accounting, when you are into a new month, but a previous one hasn’t been closed yet, and there are still some invoices to enter for AP, it is standard to place the invoice date as the last date of the month. So, it seems as if some of your clients are waiting until after the month is over and getting close to closing to enter the invoice you send them.
What I see when a company needs to make an announcement to customers or vendors is that they include a note with the invoice or statement they’re mailing. This should be your first step in trying to encourage your clients to pay on time. You can have the note similar to this: Payment must be received 30 days after the invoice date and that the invoice date is non-negotiable. It would be appreciated to enter the right and accurate invoice date. Please expedite your payment accordingly, but if payment is not received 30 days after our invoice date, we will charge interest.
After that note, it is certainly understandable to start charging interest. If they don’t pay the interest, you can report them to Dun and Bradstreet.
Excellent luck.