A good client has suddenly gone bad. Help!

Aunty B is on leave. This article first appeared on November 23, 2010.

Hi Aunty B,

I am a small business and I’m having problems with one particular client paying their invoices.

I run the business by myself and cannot cover long periods of time where the invoices remain unpaid. Some of this is dating from the beginning of September. Our terms are clearly seven days.

They have been clients for a few years and have been fairly good until now. I have sent a number of reminders and keep being reassured that it will be paid in a day or so but it’s just not happening.

The problem I have is that I have a coffee service and I supply a coffee machine for free to the business and they purchase coffee pods off me. I usually service the machine every two months and deliver coffee at this time. This particular business has placed a number of extra orders for coffee in-between servicing so I have gone out each time and delivered extra coffee but as yet have not been paid (its not almost months). I have had to pay the GST on all the invoices despite the fact the client has not paid so not only have I provided a service that I have not been paid for, but I have also supplied stock and also had to pay GST! I’m not sure what to do.

Thanks for your help,
Caroline Springs

Dear Thanks for your help,

Dig deeper. Has there been a change of people? Is there some new regime whereby they are paying bills really slowly? If not you can only conclude one thing: this is a company in big financial trouble. Call a meeting immediately with the owner. Tell them you cannot finance their business any longer – which is what you are doing. Tell them they have to agree to a plan to pay you and they must meet those deadlines or supply stops immediately and you will then be forced to take aggressive measures to reclaim the debt. Tell them this is your company policy, no ifs, no buts.

Be very clear on this. Understand that often when people face financial troubles in their company, they keep going believing that they can trade their way out. Sometimes they can. But sometimes they can’t and they end up owing heaps of money. In effect what this company is doing now is using you as a bank. It’s not fair and you are not going to put up with it.

There is another reason to get tough now. Once we hit late November, people often use Christmas as an excuse not to pay until February. All sorts of excuses are used, from the accountant is on holiday to the heavy mail load meant the bill never arrived. Go and chase that debt now!

Good luck!
Your Aunty B

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