My AR has gotten out of control.
Beginning immediately I’m implementing a penalty for all invoices over 45 days old.
Also, I’m considering if a 5% Net 30 will have any impact
If it goes to 30 days, I usually send out a second notice with a clerical fee for the new invoice. It is amazing how many people 'remember' the bill when it might cost them more. Most often payment just shows up with the original bill just a couple of days after they receive the second bill.
in my quotations, i explicitly state:
30% upon signing of contract
40% progress billing upon submission of digital copies - usually pdf
30% final billing upon submission of hardcopies & CAD files
guess what, no one bothers to read & understand these items.
some client would sign off on the contract & asks me 'when can i deploy?' without any mention of the release of the DP!
if it is a repeat client with good pay record i usually deploy without DP. but for new clients, i won't even budge an inch prior to receiving the DP check.
i guess clients do not know how to read contracts these days.
> My AR has gotten out of control.
> Beginning immediately I’m implementing a penalty for all invoices over 45 days old.
>
> Also, I’m considering if a 5% Net 30 will have any impact
Had this problem for years. Would send 2nd or 3rd notice with interest and late fees, but did not help. Found a solution a few years ago that solved the problem.
If you are not a regular trusted client or do not have a closing scheduled at the Title Company, then the following applies.
- Deposit of half the quote before I step out the door.
- When the field work and drawing is done, I email a unsigned preliminary of the drawing and the invoice as PDF files, along with a reminder that the signed/sealed drawings will be mailed after the balance is paid.
- Also offer and remind them that I take credit/debt cards.
This has really worked. I was worried about losing work when asking for a deposit as many in this area are custom to the old hand shake deals, but it has not been an issue.
I have also made it a habit to correspond the scope of work and payment details via emails that ask for a reply. Makes for a simple contract in writing and the client knows what to expect.
Scott
I usually enclose a copy of the state statute for Theft of Service with the applicable sections highlighted. Since it provides for an extra $1000 plus legal fees and anything over $1500 is a State Jail Felony, I usually see payment in a few days.
Bruce
I think a lot depends on what your client mix looks like.
Mom and pops usually pay me promptly.
Government agencies and institutions pay on a regular schedule, receipt of payment depends on where I hit the cycle, assuming that the PM is organized and approves the invoice promptly.
Commercial clients are the ones that string me out the longest, and the biggest ones are the worst offenders. The last job I did for a Fortune 500 company took over 6 months, for no other reason than they knew it wouldn't make sense for me to sue. Mid-size firms are better. Smaller AEC outfits tend to be a couple of steps down the sub chain, and it takes time for payments to cascade through the chain; 90 days isn't uncommon for these clients.
Still, it beats not getting paid. I still have one slippery developer who skinned me for almost $6k (now worth over $8k with interest on the judgment, except that he's judgment-proof, so it's really not worth anything at all). I pisses me off every time I see that on my AR statements, but I'm just not ready to disappear it yet.
One sure way to stop those slow payers is to get your local or state associations to band together & form a blacklist. Distribute this to all members. A surveyor then can opt to offer his services or not when they ask for a quote. Of course this is useful only if majority of surveyors are organized.
