Hi, sorry if this topic has already been mentioned but a search didnt bring up anything.

How do you deal with overdue customers?

Now obviously if a customer doesnt pay in X amount of days you suspend there account until payment has been made.

Some people add a surcharge/deposit onto accounts that dont pay on time, how much is this normally and what method do you find best to enforce this?

The reason i ask is mine is currently set as:

Accounts that reach 3 days overdue will be suspended until payment has been received, If payment is not received within 7 days of suspension your account will incurr a reactivation charge of £15. Accounts overdue by 30 days or more will be cancelled and all files removed from our servers.

But we are fairly lenient with the reactivation charge and in most cases waive the fee but we find because of this some clients do take advantage of it.

So its going to enforced from now but hopefully with a few changes.

What im thinking is something along the lines of making it relative to there monthly fee, i.e:

Accounts that reach 7 days overdue will be suspended until payment has been received, If payment is not received within 7 days of suspension your account will incurr a reactivation charge equal to the amount of your monthly fee but not more than £15. Accounts overdue by 30 days or more will be cancelled and all files removed from our servers.

Im in two minds whether to change this or not, the current one is clearly laid out in our terms of service and is mostly a great incentive for people to pay on time but a £15 reactivation charge seems an awful lot for someone who only pays £5 a month.

So there you go, how do you deal with late invoices? if you have an additional/reactivation charge what is it and how do you enforce it?

Any suggestions are more than welcome.

Cheers.

Well for us we reserve the right (though hardly use it) £35 for VPS and £70 for dedicated servers and its more there as a deterrant than anything else. Also when sending out late invoice notices I find I get a lot more response if I craft one that says something like

"We see that you currently have an overdue invoice. IF you are having trouble paying please get in touch"

Basically something quite gentle as people respond to it more than the automated notices which people tend to ignore.

For actual cancellation we do

Invoice sent 5 days before due
Remind sent 2 business days overdue
Suspension 3 business days overdue
Pass over to collections 2 weeks overdue

If we are contact however ( such as a broken Paypal account ) then we are flexible. Its just that small percentage of users that ignore you that take the most time. Also don't be afraid to pick up the phone and take CC details directly, which does work as well

Rus

And theres me thinking i was strict with a "3 days overdue suspension" (thought the standard was around 5-7)

But i do find our policys very similar (with the exception that i only provide shared and resellers at the moment)


Invoice sent 5 days before due
1st reminder sent 1 day overdue
2nd reminder sent 2 days overdue
3rd & final reminder sent 3 days overdue (account is suspended on 3rd notice)

£15 reactivation charge added 7 days past suspension (10 days overdue)

Account backed up and downloaded to local computer 30 days past due and all files removed from server.

we dont have notices in emails regarding late payments (except for the reminders) but there is a notice on our foums regarding late payments etc...


As always, we are willing to work with people regarding there monthly payments and we understand that problems can happen, if this is the case and you feel you are unable to make payment in time and wish to avoid your account being suspended you MUST contact us stating the reason for the delayed payment and expected payment date.

Id like to think thats gentle and polite enough but adding a small bit of text to emails similar to what youve said is a good idea and certainly something thatll be considered.

What you said about the £35 additional charge though, do you actively enforce that or find yourself being fairly lenient with it?

As you said, its more of a deterrant but some people take advantage of that.

The way we do it is put on a $40 reactivation fee for our servers and there really is no fee for regular accounts as they get automatically unsuspended when the invoice is paid.

For the $40 charge, it really depends on the situation. We are pretty good about it if a client talks to us and lets us know ahead of time, we will not even suspend them if they are a long standing client with good track record. However, if a customer does take advantage of this, we do enforce the fee as it is there for a reason.

On a side note, who do you use for Collections? How does that work exactly? We have not had to go that route and hopefully won't for as long as possible, but it's good to know. Actually, I might start another thread on this. :)

I guess I would be considered harsh, then. I send out two copies of the invoice three weeks before the invoice is due. This gives them plenty of time to know what's coming and I also have an option on my invoice to call me and make another payment arrangement (So I do work with everyone if they simply ask). If payment is not made 24 hours after it's due, I email a copy of the invoice. 48 hours after their account is due, I suspend. I have a lot of local clients so I collect most of my payments in cash, anyway. So I don't really have any problems.

I just recently ran into this problem with a reseller of mine. Invoice was sent 3 days before the beginning of the month (invoices are due on the 1st). A reminder email is sent on the 3rd and the 5th of the month. Suspension notices are sent on the 7th of the month. This particular reseller was setup on CCBatch. It was declined 2 times and each time he was sent a notice stating so. I received and email from him telling me to not attempt to charge his card anymore and he would get back to me on payment.

So the 7th came around and this customer has been with me for a long time so I went ahead and delayed the suspension until the 10th. On the 10th the payment still hadn't been received and his account and all of his sites were suspended. The next day I got an email asking why his accounts were all suspended and I told him he still had an outstanding invoice. He paid it and the accounts were immediately unsuspended. Over the course of the next few days he came to the conclusion that I was at fault that he didn't pay his bill and wanted compensation because he lost a few customers due to the suspension/downtime. I couldn't believe it.

...Over the course of the next few days he came to the conclusion that I was at fault that he didn't pay his bill and wanted compensation because he lost a few customers due to the suspension/downtime. I couldn't believe it.


Incredible, isn't it!

You guys mentioned collections, as in collecting agencies. We have a few outstanding invoices which get ignored. Is going through collections expensive? is it a hassle? how do they get paid? is there a minimum amound? Questions upon questions, do you guys know?

Thanks

I give 14 days which I am starting to think is a bit too much but regardless there is a $15 fee for reactivation after the site is suspended.

The main thing is not giving any special service to people who are late as some will soon start to abuse the system. I have found some just do not pay on time and the reactivation fee has really turned into a revenue generator. Dunno guess some people are just too busy and have money to burn.

I don't have a set day range. Billing gets verified twice a month. I've had people go 14 days before getting caught and one person 2 years.

I don't have a set day range. Billing gets verified twice a month. I've had people go 14 days before getting caught and one person 2 years.


Ouch lol, but out of curiosity how did someone go 2 years if you check every 2 weeks? (not a dig, just curious)

I understand what you mean though, when i first started out it was with basic pen and paper and some accounts often got overlooked, but of course when trying to then start the payments for that client it was always a case of "youve not charged me for x months, why now?"

On a side note, who do you use for Collections? How does that work exactly? We have not had to go that route and hopefully won't for as long as possible, but it's good to know. Actually, I might start another thread on this.

As for collections, well seeing as at present i only provide shared and reseller accounts collections for outstanding balances just isnt worth it, majority of accounts are between £5-10 per month so forgetting the money side of it (£10 isnt a great deal) its just not worthwhile going through all the hassle.

The replys are great so far so keep them coming but what i really wanted was an opinion on charging a reactivation fee, how much for and how to enforce it, ive read some great ideas so far, keep it up.

On our very expensive line we may have individuals pay first and last month but for most accounts there's no reason to charge an activation or re-activation fee because, in our mind, its very little work on our part. If our client values the services we provide, he or she will pay, at which point their account is automatically re-activated. If not, then we pull the server from the cabinet, wait 60 days, then reformat the HDs.

The Way tend to run it is...
Invoice sent 5 days before Due
Reminder sent on Day of Due
Reminder Sent 3 days after due
Reminder sent 5 days after due

Clients have up to 5 days to pay an over-due invoice. If their invoice was due on the 1st, and they paid on the 5th, their next 30 day rotation does not start on the fifth but rather the day the money was due, the first.

Ouch lol, but out of curiosity how did someone go 2 years if you check every 2 weeks? (not a dig, just curious)


Apparently they didn't get moved over to the new billing system and fell off the radar.

Anyone:
Do you charge a reactivation fee after suspended account with invoice is paid? Or just unsuspended when the invoice is paid?

Normally we charge a $5.00 late fee if payment is overdue and suspended until payment is received with a late fee. Have never try charge a reactivation fee...

Anyone:
Do you charge a reactivation fee after suspended account with invoice is paid? Or just unsuspended when the invoice is paid?

Normally we charge a $5.00 late fee if payment is overdue and suspended until payment is received with a late fee. Have never try charge a reactivation fee...
We are thinking to start doing this... a small $5 re-activation fee if the account is suspended for non-payment.

We currently send out warning notices "after" the due date. They get three email warnings and 15 days (1 email every 5 days) On the 16th day the account is suspended.

We are thinking to change this, however.. to a "pay in advance" system.. so they would get the emails in ADVANCE of their actual renewal date. So the first "pay now" invoice would go out 15 days before their renewal date... and then every 5 days, until 1 day after renewal date and then their account is suspended for non-payment.

It's effectively the same thing for the client, but means we are not delivering 15 days of free service if they don't pay.

1. invoice generated and email sent 2 days before due date (note that most clients are on auto billing)
2. reminder send if 7 days past due date without payment
3. another reminder sent if 10 days past due date without payment
4. account suspension if 14 days pass without payment

Note that the account suspensions are all done manually and will typically be just the resellers main domain in the case of reseller accounts (not their clients) for a few days and if still no payment, they all get suspended. This may differ for persistant late payers though (determined at the time of suspension when looking at billing history).

We reserve the right to apply reactivation fees (£5 for shared, £10 for reseller, £20 for vps/dedicated) but hardly ever do. Occasionally they have been applied though when looking at the billing history in step 4 and find that all payments for the past 6 months or so have been late. If a reactivation fee, the invoice for this is raised at the time of suspension.

5. If we've still not had payment or contact from client after 3 weeks, the account is removed from the server and marked as defaulted.

Of course, the above is not totally set in stone and if a client contacts us beforehand we can usually work with them (eg change invoice due date until they are able to pay, etc).

Communication is the key from both sides: if a customer, it's so important to keep your host in the loop if you need extra time to pay or there are any problems. If a host, it's also important to make sure all clients are aware of the policies in this area so there can be no complaints when it gets acted out (there will still be complaints as account suspensions for non payment are *rarely* the clients fault (according to many clients) but you get the gist :) ).

I was burned by the company I rented from... In their TOS they say that they can terminate accounts that are 30 days overdue. But when there was a mixup with my credit card, they pulled my server a week after contacting me. And to top it all off now they won't reply to my (polite) emails asking what had happened and how I can get my server back online...
It takes a Grade A company to ignore customers...

We have our clients on automatic billing subscriptions, so if they don't pay, that means that they cancelled their service.