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  1. #1
    Join Date
    Jan 2005

    How do you deal with non-paying customers?

    So this isnt web or hosting related, but I own a print/marketing company where we produce bookletes and mail them out, etc. We also do just regular business cards, and flyers.

    This company was origionally owned by my father, and he let a lot of people slide on payments because he knew them personally, and that's fine if they pay eventually but a ton of these customers are backed up 6 months without payment.. on large thousand dollar jobs.

    So what should I do? Send out a collections notice, then report them if they don't pay in a certain time? That would effectively kill any new business from them in the future. But I can't just keep giving them their jobs and allowing them to not pay.

    I can't make them pay up front, because sometimes people are getting money from the printing that they receive, which is fine that they pay afterwards but thats IF they pay.

    It's gotten to the point where 80% of the customers here don't pay within 3+ months, and have to be given multiple invoices and letters. These are all adult companies, and yet they act like children and ignore a simple invoice.

    So, what are your opinions? Report them to collections, and figure a non-paying business is just as good as no business?

  2. #2
    Join Date
    Sep 2002
    Toronto, ON
    I think 6 months is way too long, here's how I would do it if they pay within a month no fee's, after 1 month you charge 10% of the total amount as a late fee, after 2 months it's 20%, 3 months is 30% and so on. I think there's good chances they will pay within a month or two after you implement this.

    Edit: Since some of them are in the thousands you could go lower than 10%, say 5% per month.
    Last edited by GoTek-JP; 09-26-2006 at 06:04 PM.
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  3. #3
    Join Date
    Aug 2003
    Twin Cities Area

    there is such a simple solution to this.

    you get a contract in writing and they sign it.

    what do you mean you cant charge them up front? youre not running a restaurant for petes sake! you can charge them whenever you want.

    i charge 100% up front in almost all cases. i get a signed contract in advance.

    "That would effectively kill any new business from them in the future. " well, if they dont want to pay you, who cares if they dont come back! you gotta get hard about these things!
    Last edited by Project X; 09-26-2006 at 06:18 PM.
    if you haven't considered chapter 7 bankruptcy, maybe you should.
    eliminate your debt, keep the property you want, most people qualify.
    contrary to popular belief - no attorney is necessary!

  4. #4
    Join Date
    Dec 2005
    A non-paying customer is exactly the same as no customer just a lot cheaper

  5. #5
    Join Date
    Feb 2001
    West Michigan, USA
    Print up a nice letter to ALL customers. Explain that you are very happy to provide for their printing needs and you are running a special discount (figure out some discount promotion to offer) for all new orders and for all outstanding invoices.

    At the same time, send out a notice to everyone that is 60 days past due. Make the notice sound firm, but friendly. Let them know that their account is "seriously past due and payment would be very much appreciated" - and mention the recent flyer that went out with the discount promotion.

    Then, for all new orders that come in - make it a 50% upfront and the balance due net 30...and make them sign it. Explain that you are now requiring all accounts paid up within 30 days or they go to collections. Be nice. Don't accuse anyone of anything...just explain that its not you or them, its just a new policy to get your accounting back on track.

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  6. #6
    Join Date
    Oct 2002
    Tina's definitely right. I'd also add that a phone call or two to the Accounts Payable person at the company (or the accountant at a small company) seems to do wonders at jogging payment. A surprising number of late payers never seem to get our letters .
    If you have to operate your company behind the scenes or under a fake name, maybe it's time to leave the industry and start something fresh.

  7. #7
    Join Date
    May 2005
    Woking, England
    Maybe offer a small discount if paid on time, then interest if late.
    Web Handyman - Website and Internet Marketing Service

  8. #8
    I happened to be in your shoes recently - the only difference is what I'm a freelancer doing online research for my client on the other side of the pond, namely, Shell Company. I believe that without a help from a friend of mine who resides in the US, I wont be able to resolve the problem.

    I'm quoting my friend's message - it explains his method pretty good

    "I did call our friend Greg ****** yesterday, left another message,
    then called a higher-up in his group, Judy ****, and left a message with her
    too. Finally, at the end of the day, he returned my call.
    He told me that he had gotten the necessary approvals and
    authorizations, and that your invoice is "in one of the offices" there,
    waiting to be processed. He mumbled again about how things move slowly in a
    large company, people are on vacation, etc., etc. I very much get the
    impression from him that he feels he is not responsible for this matter. I
    repeated to him that it has been a long time since he has had the invoice
    (>3 months now). I asked him when we might expect this payment to be
    complete, but he said he had no idea. He acted as if such a request was
    incomprehensible to him, how could he possibly answer it? He had spoken to
    the people in the payment office, and they had no idea when it would be
    complete. He had ascertained that the payment had not yet been made, which
    we already know.
    I told him that I will call him back in two weeks to see if the matter
    is resolved. If I still get these somewhat disconnected answers from him, I
    will let him know that my only obvious recourse will be to contact people up
    at higher levels in the company.
    I will then call those people at the next
    two levels up, and let them know that we haven't gotten satisfaction for the
    work you did for Greg. At some point, I will reach someone who will realize
    what an embarrassment this is to them, and it will be easier to pay up

    rather than to have me continue contacting them. This is the "mosquito"
    that I reserve for the worst payers."

    Hope it helps.
    Alles Normales blog - looking into profitable opportunities emerging on a border between ONLINE and OFFLINE worlds.
    First-hand experience from an entrepreneur from non-English speaking country.

  9. #9
    Join Date
    Sep 2006
    Quote Originally Posted by UK-Networks
    A non-paying customer is exactly the same as no customer just a lot cheaper
    lol, no doubt!
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