Hello Everyone,

I recently started a web design and hosting company (two months old). I am a reseller. I have read a couple of articles and feel being a reseller now is the best option for me.

I would like to know what to do if you have a customer that makes you chase their payments.

Each month I have to call this one customer and remind of payments due. I mail invoices on the 1st of each month. Payment is due on the 15th of each month. Each month the customer claims they have not received the invoice. I have tested the software (clientexec) and when I bill myself I get the invoice. In addition, other customers get their invoices. To assist, I mail PDF copies of the invoices. Furthermore I have added a link to Paypal on my site to make it very easy for payments to be made and you do not have to be a PayPal customer to pay me. I have suspended the site but that hasn't seemed to push for payment.

Please tell me how to handle this customer. (:uzi::) , maybe?) I know this is a quality I should not have when running a business and I'm working on it but I do not like confrontations.

Would you end this relationship permanently? (but that would hurt word of mouth advertisement)

Would you charge late fees? If so, when and how much? (By the way, when I called her and told her if she doesn't pay by Friday (today) I would rerate her charges for two months with late fees. She paid me within 2 hours of that message. And to top it off, this is a BUSINESS website!)

All help is greatly appreciated. I apologize if this posting is too long or does not follow some type of procedure. I found this board only today.

Don't do manual billing like this unless you're taking up several months/years at a time. Your best bet would be to charge on a credit card or have them setup a direct deposit with you. With the credit card option, they won't want to be late on payment or they'll be paying crazy interest.

Ask them to provide credit card, which you will bill automatically OR ask them to pre-pay for 1 year at least otherwise. Set late payment fees of $30 for each bill paid after 7 days when balance is due - this way customers will stop play games almost immediatelly.

Billing is a huge time wasting task if you don't know how to handle it.

Sounds to me like she is just avoiding making the payment.

You could do a few things though.
I would ask for an additional email contact (this is a good idea anyway and by having 2 emails for each client, its highly UNLIKELY they wont receive your invoice to both those addresses)
I would have a date to "suspend" any unpaid account (ours is 7 days late)
We are flexible though and if a client needs additional time then we grant that, no problem. The key here is when you hear "nothing"
Suspending a site surely gets the attention. In our case when we suspend a site there is a $20 re-activation fee added to the hosting bill.

I call those type clients "Missing In Action" :D You can sometimes spend ALOT of time tracking clients down and it gets tiring and becomes alot of work. People forget sometimes to "update" their account info routinely with their host and this can cause contact problems. :peace:

know this is a quality I should not have when running a business and I'm working on it but I do not like confrontations.


Set policy and stick to it.


Set a firm policy in your TOS that explicitly describes how late payments are handled eg.
Hand accounts X days past due off to a Collection Agency (may not get your money back, but at least they don't get away with it.)
Site suspension (an embarrassing page might do wonders)
Be firm on a date without notice (client MUST call before due date for additional arrangements or hit them with a fee)
force prepayment with clients with repeat issues.





Would you end this relationship permanently? (but that would hurt word of mouth advertisement)


Depending on the type of customer, if you suspend a site it'd probably already hurt "word of mouth" value.

Do you really want more customers refered by some one who can't make payments?

This was a problem when we first opened and were very new. Until I got ModernBill. I started using the auto suspend features. It's amazing how many people will ignore invoices until their sites get suspended.

My non-pays went down almost 50% by adding that option. MB sends out 3 noties of late invoices, warning of the suspension, and on the 5th day it automatically suspends the domain.

When a customer comes in and pays their invoice, MB sees the payment and automatically enables their service again. Very nice features for small companies.

I work for a large phone company that has incredible billing issues. You'd be amazed how many people don't pay their bill.

I would send out a notice stating your new late payment policy. If you don't have problems with any other customers, just send it to her but make it look like it was mass emailed to everyone else (so she won't be offended).

Say something like

"Due to an increasing number of payments coming in past due, we're implemented a new billing policy. As much as we'd like to keep with our current method, late payments hurt our bottom line. Starting today, all late payments will incur a (insert fee here) late fee. Any payment more than 15 days past due may be terminated or required to pay (insert number of months here) upfront. We appreciate your understanding of this new policy. When everyone pays on time, we can ensure that we are devoting the majority of our time to better serving our customers. Thank you!"

--Tina

Some clients actually like the idea of paying late. As long as they pay up with a reminder or 2, there's usually little harm.

For us, we like to setup recurring payments, be it paypal or credit cards. I usually explain to them it's best for both parties as they do not need to micromanage the payment that much, and that they can stop it whenever they want. Most usually will be willing to allow you to do so.

Auto subscriptions are your friend. :) We have ours currently ours set up that way. As an example, we have one customer (his personal site), and hes young and forgetful sometimes *grin* that he has twice contacted and went 'I dont know if my auto pay will go thru or not b/c of.....', for most customers, we have a feature that allows for either a second invoice sent out within a certain ammount of time (of the clients payment due date) or for much later a feature that will auto suspend the site until payment has been made. By luck, we have not had to use this yet, but its good to know its there, just in case. We have yet also needed to issue any late fees, if someone can contact us with reason of whats going on, its much easier to handle the case w/o a auto suspend or tack on a lack fee for something that just randomly happens. Now, if they are a constant late person, as this seems to be - I would deff. suggest setting up a late fee area in your TOS to cover all areas, just on the safe side.

Thank you for all the great help. I have decided to send out a new TOS to her tomorrow. (She is the only late one.) In addition, try to persuade her to set up recurring billing.

I will suspend her site after 7 days past due. I will charge a $20 reactivation fee in addition to a $5 late fee for payments over 10 days past due. I will make this new TOS look like I'm sending it to everyone. I may offer her one month free if she pays one full year in advance (excluding these past two months of hosting).

E-Places, I use to work for a large telephone company too and I am familiar with how late people are on their bills. I guess I expected more from a business consumer rather than a personal consumer. I get ClientExec free with my package and I will see if it has that same functionality. I am still learning its capabilities.

My company is not big enough to allow customers to pay whenever they feel like it. I just started and don't have that many customers yet.

Again, thank you all for the wonderful advice.

No company is big enough to be able to afford non-paying customers. Not only are you not getting the money, but you are taking your time away from paying customers to deal with a non-paying customer. The only one who wins in that situation is the one who isn't paying.

Well said. keliix06 :)

I have 400+ customers and have the following way of dealing with things:

They are invoiced 14 days before due date, on due date they are invoiced again. After 7 days past due their account is suspended (our suspend page redirects their website to ours!). If they have stll not paid after 1 month past due we terminate the account.

Some think this is harsh but in my opinion, we are a budget hosting company that does not charge a lot to start with. We don't have the time or resources to chase people. Charging a late fee or reactivation fee won't work (we are a budget hosting company whose typical customer has short arms and very deep pockets) so it's easier for us just to let the non-payer go elsewhere.

Occasionally we get a 'terminated' customer come to us many months down the line wanting to know where their website is - we tell them how much they owe us and we never hear from them again ;-)

Just my tupence worth - and FYI, client exec doesn't support autosuspend yet but i they did tell me this will be coming soon for the cpanel plugin - hopefully around the same time we see the 'addons' made available.

Dave

When I said that I can't afford a non paying customer it was directed toward this comment,

Some clients actually like the idea of paying late. As long as they pay up with a reminder or 2, there's usually little harm.

If I were a larger company and had one nonpaying customer it would be little harm but I have less than 10 customers now so I "feel it" when she doesn't pay me months at a time.

I think I may also implement the account termination feature in my TOS. I have not sent it yet.

Again, thanks for all the input. All of your ideas are great.