I know we have several discussions on this topic on our old board, but once again we are getting slammed with this excuse.
How is everyone dealing with this? We used to only have this problem on job accounts, but now we are getting from everyone.
I am feeling a bit defeated here.
We hold them to their terms, by holding up orders,charging them with finance charges and we remind them of the terms of their signed credit application agreement, which says nothing about their payment that is due to us being contingent upon them getting paid by their customer. Regardless of whether they have gotten paid or not,they still have a responsibility to us. I hope this helps some.
We do pretty much the same thing as Valerie! I've also contacted the general contractors to ask for joint checks or to try and move things along. If you don't don't know who the general is since it's not a job account, you can always ask your customer. I've found that people who are actually being held up by getting paid are more than willing to have us contact the general contractor to apply pressure. The one's who get mad about us contacting the general contractors are generally the ones who get paid and don't pay us.
Another good tactic is to put them on COD if any job invoices, e.g., not linked to any specific job, goes past due. Explain ahead of time that if you don't have lien rights, then they must pay within your terms, or purchase COD. The loss of credit privileges, or the threat of same, usually gets their attention.
We do much the same thing. As soon as a customer the utters the words pay when paid we send a salesman over to talk to the customer on a local level while we contact their corporate office. We say we will hold orders immediatly if they do not adhear to our standard terms.
Hi Christine,
Just to chime in, like everyone said, right away, we put customers on credit hold, slash their credit line in half and take a stance on your decision. If they decide to order from you, we do a COD + a % of the past due to help reduce the exposure. You can also have them pay the amount of the order and apply it to the past due rather than the pending order. Just make sure you tell your customer that up front so their payables doesn't close out the p.o. for the current order.
Ditto her on what everyone else is doing. I also put a clause into our welcome letter for new customers. It states that we are not a "pay when you get paid" company and that we have terms which we expect to be paid accordingly.
I usually turn this request around when it is brought up by a customer. I refer to the proposal as Pay IF Paid rather than Pay when Paid. I ask the customer directly what happens if their customer fails to pay, and I expand on this by noting that we take the risk. If their customer pays, everyone is happy. If their customer does not pay, we absorb all the risk and the loss despite the fact that we nad nothing to do with their credit decision making process.
One final comment: Under a Pay when Paid arrangement, your customers have no incentive and in fact they have a disincentive to do any credit assessement of their customers or to limit their dollar credit exposure. This leads to situations in which customers are shipped far more than they can reasonably be expected to pay, or situations in which your customer continues to ship even though their customer is past due and/or has broken payment commitments. Why" Because under Pay When Paid terms, your customer has NOTHING to lose.... at least that is how I see it.
Best regards
Michael Dennis
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