Question for self-employed or business people....

[G-Mac]

In addition to my full-time job, which I'm retiring from in less than two months, I do some welding on the side. I recently did a job for a machine shop. He dropped the machined parts off to me, ready to be fit and welded. I quoted him a price and he was fine with it. When he came to pick them up, I was expecting he was going to pay me. Instead he asked if I could invoice him. I said "sure". So, I e-mailed him an invoice. I put on it "Due on Receipt". A couple of weeks go by and nothing. I text him to see if he mailed payment. He said he would pay me in his next "billing cycle" and I should have payment by the end of this past week. Nothing yet. It hasn't been 30 days yet but we're getting close. I figure 30 days is standard business practice. I don't want to be a jerk because I plan on doing more of this type of thing after I retire. I have a two year business degree so I know how business is done, but I still feel like "I did the job, I want to get paid". I really don't care about his "billing cycle".

 

[arjay]

I used to hand people the bill in person and stand there with my hand out until they wrote the check lol

Invoicing people can take anywhere from 30-90 days to collect,so figure that loan (and inconvenience for us little guys)into your pricing.I really didn't like invoicing and most people understood that. One "friend" took advantage twice and after that I just stalled whenever he called with something he needed done (invariably small and aggravating!)
The guy was a dr. lol

 

[Rudi]

These days, I'd say payment at pick up.

 

[Bekeart]

MY PAYMENT PLAN

In God we Trust,
All Others pay CASH

Bekeart

 

[glenwolde]

These days, I'd do C.O.D. and take credit cards. Most people want the points anyway. Unless you have a way to run their credit you shouldn't be giving credit to anybody. You never know.

 

[Rustyt1953]

I was self employed for many years. How I conducted business back then is probably not how I would conduct it today.

 

[two-bit cowboy]

I don't want to be a jerk because I plan on doing more of this type of thing after I retire.

People will teach you how to be a jerk if you let them.

Don't let 'em turn you into one, and don't let them be one.

Despite your academic education there's this thing called "the school of hard knocks."

I don't recommend it.

 

[handejector]

Henceforth, establish your terms before doing the job.
If you want to be paid at pickup, make sure they know that and have a good specific invoice ready.

If you do offer terms, spell them out on the invoice-
"Net 10 days" or "Net 30 days" or actually put the due date
with something like "add 10% for late payment".

 

[biku324]

I do some service contracting. The terms are routinely, 'net 30,' or payment 30 days after invoice.

 

[444 Magnum]

In my part of the world, labor is paid when labor is finished.

Materials are about the only thing that run accounts. Material accounts are invoiced and mailed at the first of the month, due by the 10th, passed due and late charge on the 15th, interest at 30 days and eventually collections.

If this is a shop which will give you steady business and you want to open a monthly billed account, do so, but make them fill out an application and keep it on file with pertinent information.

If a "once every now and then" customer, payment at pickup. Hang up a sign, payment due at pickup.

 

[Hair Trigger]

When he came to pick them up, I was expecting he was going to pay me. Instead he asked if I could invoice him. I said "sure". So, I e-mailed him an invoice. I put on it "Due on Receipt". A couple of weeks go by and nothing. I text him to see if he mailed payment. He said he would pay me in his next "billing cycle" and I should have payment by the end of this past week. Nothing yet. It hasn't been 30 days yet but we're getting close. I figure 30 days is standard business practice..

He should pay you based on YOUR billing cycle, not his. You are the one who billed him, and yes, 30 days is traditional; but you might have been 20 days into your own cycle when you billed him. In the future, your invoice should read something like due on receipt, and also have a late date and late penalty, if any. You have to consider your cash flow when you bill someone, not the other way around.

I started working part-time with a friend who has a landscaping business, after I retired from being a Surgical Nurse. Since it's not an independent gig like yours, I'm not in a hurry to get paid, as SS and a pension pay all my bills and what he pays me is my fun money. I'll let it accumulate for a month sometimes, maybe more, before I'll ask him to square up, if he hasn't already mentioned it. That way, I get a bigger chunk. I've kidded him over the last three years that he actually owns most of the guns in my safe, since he "bought" them for me.

 

[hannstv]

Terms of payment are just another issue to be discussed when contracting a job. You should never be reluctant about discussing payment. Make your terms clear.

 

[Onomea]

Seller sets the terms.

He asked for an invoice. You gave him one with "due upon receipt" on it. Couple of weeks go by and no payment. You ask and he says he'll pay "next billing cycle."

So basically he is blowing you off for his convenience.

I think he's being a jerk and you are being very patient.

The advice to make terms clear in the future at the time of making the deal/contract/price negotiation is good.

 

[GypsmJim]

When I was in business and I sent out invoices, they said net 30 with 10% per month if overdue. I had a business bank account and all payments were to the business. That helped me facilitate all my taxes. I NEVER did a job under the table. All my revenue was claimed on my taxes.

When I retired and decided I would only work for past good customers, I cancelled my business bank account. Thus, any payments would have to be to my personal checking account, in my name, not the business name.

My new policy was cash (or check) in advance. Without it, I didn't work.

They could send me a 1099 if they wished, no problem. But my accounting was not to be a hassle.

I get much less business these days, as I desired, but there is no hassle.

I STILL declare all my revenue and pay taxes. That's the right thing to do. WE, the middle class, end up paying for the morons that work under the table.

 

[Golddollar]

All of my medical providers have signs in the office that say payment is due immediately upon provision of service.

 

[SC_Mike]

Half on drop off, other half when you pick it up.

 

[Golddollar]

Word gets around as to who pays their bills promptly and who doesn't. The builder of my current home said that they had no problems getting subcontractors because the subcontractors knew that they would get paid promptly by the builder.

 

[AJ]

I usually pay for things that I have made by a retired machinist when I order it.

 

[otis24]

My credit manager is Helen Waite. If you want credit, go to Helen Waite!

 

[1BadSmith]

I've owned a small masonry business for over 20 years, due upon receipt means just that...for my builders it's a little different, but still 30 days or less. But Joe Blow is payment the minute I'm done. I can't go down to my local supper club and square up a few days or weeks later. Dinner and drinks are served, pay the bill!! I get it for this one, but moving forward, I'd make sure your customers know where the bear craps!

 

[LoboGunLeather]

Probably the most frustrating part of small business, especially service-related businesses. I could recite dozens of experiences as a small-time contractor. Suffice it to say that it is always best to reduce everything to writing (work order, contract, job specifications, and payment terms) and stick to the agreement.

A regular customer providing multiple jobs on a regular basis might be worth running an open account, billing cycles, etc. The occasional customer wanting work done on an as needed basis should expect (and be required) to pay the bill upon completion. Personally, I would not release the completed project until payment has been made.

Commercial banks provide business financing, usually via a negotiated line of credit agreement. That service comes at a cost, typically a fairly rigid payment structure with interest accruing from date of advance to date of payment, and usually ensured by collateralization of business and/or personal assets. By putting you off for a month (or two, or three) your customer has simply bypassed his usual expense for business financing by forcing you to carry his debt interest-free.

 

[glenwolde]

You can also offer a prompt-pay discount. Our terms were "2% 10 days, balance 30" meaning that if it was paid within 10 days they got a 2% discount. Most took the 2%. If they don't, they might have a cash-flow problem.

I'm a little wary of the "billing cycle" he mentioned. That's often just an excuse for delay. Another indicator of a cash-flow problem. We used to cut checks weekly, so two weeks was the longest you'd go with us on a C.O.D. We took every prompt-pay discount we could.

But I also understand his point of view. It depends on how big his operation is. Sometimes it's a hassle getting a check cut for a C.O.D.. But he might just be waiting to get paid before he pays you. I don't know about you, but I ain't no bank. There's a surprising number of cash-poor companies that are riding the "float".

 

[Breakaway500]

I've been running my own repair shop for over 35 years. I have never accepted credit cards. I will take personal checks from people I know,as in regular customers. I have only had a few bounce but eventually got paid. If they become habitual bouncers I bounce them off my customer list.
The only customer that I will invoice is for town vehicles because if push ever came to shove I just won't pay my tax bill..!

I give a 10% discount for Ca$h payments and 90% of my customers pay in that manner.

Your business..YOU make the rules. People will walk all over you if you lay down for them..

 

[chief38]

I was in my own business for 30 + years. My terms for large corporations were 30 days and I offered a 2% discount for payment within 10 days. I would say that about 15% of the Corporations took the 2% discount and paid within the 10 day period and the lions share of rest paid within the 30 days. There were a very small amount that I had to chase down but except for a handful of times I got paid. There were times I had to make a a bunch of phone calls, be annoying, or make a visit to their office, but that usually worked out.

Over my career I did get skunked a few times by company's or people declaring bankruptcy or just disappearing and while it bothered the hell out of me, it is the cost of doing business. Unfortunately there is not much you can do if someone simply does not have the ability (money) to pay you.

It stinks and I know you feel abused, but that's reality. All you can do in the future is establish terns of "payment due upon pick-up" and with the exception of a handful of known good accounts and trustworthy customers who you can trust, you don't hand over the finished work until payment is brought to you. Checks can bounce - but that is usually rare. You could also apply for a Visa and MC account and while you will have to incur a 3% fee for using it, at least you will give your customers with a low cash reserve or limited funds, a method of payment. You can even keep the credit card thing low profile and only use it when needed. 97% payment is better than 0% any day.

I hope you do collect your money - good luck.

 

[MaricopaKid]

I used to hand people the bill in person and stand there with my hand out until they wrote the check lol

Invoicing people can take anywhere from 30-90 days to collect,so figure that loan (and inconvenience for us little guys)into your pricing.I really didn't like invoicing and most people understood that. One "friend" took advantage twice and after that I just stalled whenever he called with something he needed done (invariably small and aggravating!)
The guy was a dr. lol

Most of my family are/were small business owners. When a discussion about "Deadbeats" came up, the answers were always the same... "Doctors, Lawyers, and Churches."

 

[Golddollar]

I got educated at an early age watching my dad have to chase after tenants who wouldn't pay rent on time. He wasn't a professional landlord, just a working person who was renting out our house after we had moved to another town for his job. I would go with him, and I remember it being a long drive back to our old house because the freeways hadn't been built yet back in the early 1960s. It basically took up our entire Saturday because of the distance and time involved. Back then I guess there weren't the ways to check people out so readily as there are now.

I don't like being in debt. If I have to leave the house when my lawn guy is still working I give him the check before I leave because I don't want him to have to chase me down for his money. I guess that's the big lesson I learned from visiting slow paying tenants with my dad.

 

[Telecaster]

Half down, half on delivery, no exceptions.

 

[Telecaster]

I almost always get paid by check, which I can deposit in my smartphone app. Cash means I have to drive to the bank and get in line to deposit it, which costs me. So I don't understand the cash discount thing, unless it's cash now vs. invoice and 30 days of waiting.

 

[LoboGunLeather]

I almost always get paid by check, which I can deposit in my smartphone app. Cash means I have to drive to the bank and get in line to deposit it, which costs me. So I don't understand the cash discount thing, unless it's cash now vs. invoice and 30 days of waiting.

Not to mention how difficult it can be to keep track of cash payments and make sure everything is reported on the income tax return. Who needs that much stress in their lives?

 

[Kanewpadle]

I ran a small business for several years. Other businesses expected us to open a charge account for them. We didn't until they used our services a few times. Then we made a determination as to yes or no.

We had them sign a document stating our terms. If they didn't, no account. If you only used us once a year, no account.

A charge account is a PRIVILEGE. Not a right.

Oh, but we're listed in Dunn & Bradstreet!
But we have an A+ rating with the BBB!

Don't fall for it. Protect yourself.

Generate a form that you can use. State your terms. State the work to be done and the agreed upon price. Have the customer sign it.

If you're good at what you do and your reputation grows you may be busier than you intended. You may need liability insurance. You'll have to pay corporate taxes. You may be able to write off certain things too.

You may want to consult an attorney and a CPA to set your business up the right way.

But again, protect yourself at all costs. Even if the customer walks away. Working for the public isn't easy.