Pay me, already!
Sue, San Jose, Calif.
We are a construction company. A client is giving us a hard time about final payment. The invoices are usually due with in 5 business days. She asked us to wait until the insurance company paid her the final payment then she would pay. I have waited two months and now she is saying that the insurance company did not pay her enough and that she will only pay us what the insurance company sent her. There are extras that she added on that were not insurance related. I am not sure what to do. Maybe we should change our payment terms to require payment before we start the work. What should I do?
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From Neil Maycock, Sheffield, UK It is always difficult never mind what the business you are in, to collect final payment. I think you would be well within your rights to now start work until the balance is paid.
From Ram Hingorani, Omaha, NE If it is a repeat customer then you are in a tough spot and need to change your future proposals/contracts to tie them into payment terms you can live with. If they are a 1 time client check with the County and see if you are out of lien time. If not, file a lien on the property and tell her you will release the lien once you are paid in full.
From ML in Washington, DC Several experts say to set your payment terms up front. Offer a discount if the customer pays early, invoice them as soon as possible and often, add penalties for late payment fees.
Resource:
http://blogs.wsj.com/independentstreet/2008/10/01/five-tips-for-surviving-a-cash-flow-crisis/
join the local bbb and require 40 percent up front