Networking business owners getting paid ?

[BobY777]

I have a question for business owners who do computer networking as a business.

I work for a computer networking place that works on workstations and servers, etc.

We have found that many clients are very slow to pay. They think we are the bank.

Do any of you have any proposal writing techniques that help encourage your networking clients to pay you on time? I know that an interest charge can be added, but slow payers don't seem to care.

I'm thinking we should should start putting in our proposals, that we own all the networking equipment until fully paid for.

That way, we can remote into our equipment that we still own, and turn it off, if the client won't pay on time. That seems to be one way to encourage clients to pay on time. Sound workable?

We have one client who urgently needed our help today, but they have owed us a lot of money for about 8 months. Our attorney advised us to not talk to them about anything, other then referring this client to our attorney about paying the money they owe us first. Maybe this will work. But this darn client has caused us to have attorney fees now.

Maybe you all have other ways that you use to get clients to pay on time?

[golfnut]

It sounds like you're leasing the equipment to customers because you say that you still own it?

If that's the case and you have administrative access to the equipment, put a statement in your agreement that says if payment is delayed after x amount of days or months, that you will disable the router. You could also ask for a credit or debit card and setup automatic monthly withdrawals.

Also remember the 80/20 rule or the Pareto principle: about 20% of your customers will generate 80% of your revenue over a given year yet most businesses will spend 80% of their time on customers that generate 20% or less in revenue.

This rule applies to a lot of things in general and is why some large companies like IBM have outsourced their PC business to focus on larger customer in that 80% revenue range.

http://en.wikipedia.org/wiki/Pareto_principle

If you have any customers that are consuming this much of your time and now lawyers fees, they are in the 20% revenue category and aren't worth keeping.

Greg

[BobY777]

Hi Greg:

You're a business guy. Thanks for your insight here.

Our intention isn't to lease the equipment. I didn't make that clear.

Basically we do job proposals. If a customer wants us to do the job, they will sign the proposal and pay us for the equipment up front. We do the job, and then we bill them for the balance, which is the labor.

But sometimes there are customers who for some reason are veeery slow to pay the balance on a proposal that they signed and accepted.

We don't want to do litigation to get the money because we would prefer a good relationship with clients, but there are always some clients who will take advantage of a situation if they can. They will find the limits of how far they can go in not paying...like a little child tests the limits of what they can and cannot do.

Seems we almost should be employing another part timer...someone just to call clients who are behind in paying. They must think we are a loan company. What they do, screws up the cash flow. They are business people too...they should know that. But they don't seem to care.

I'm thinking we should maybe give two quotes...a larger quote for payment by check. And a smaller quote for payment by credit card. At least with the credit card, we know that we will get paid. That idea came to me just now. I kind of like it. What do you think?

I'm thinking of starting an area organization in my area devoted just to IT companies that deal with businesses. It could include all of the IT competitors in my area. Slow pay companies and dead beat companies, who eventually lose service from an IT supplier (like us), will try to go to another IT company and take advantage there.

The new IT company has no idea of the new companies bad paying habits. If they knew about the bad companies, they would want to send them to their competition. But with an area wide organization like I illustrated here, the members of an IT credit agency group would have access to a database of all the dead beat companies that all our members run into. That way no one will do business with the poor payers.

It's like the credit rating system that credit agencies use, but in this case, it's just for B2B IT companies.

I think that sounds like an idea. I might be able to make some kind of business out of that for myself. Cause poor payers cost IT companies big money. And we all know that every IT company has deadbeat clients...and clients from hell...clients that no IT provider would want if they only knew the background of that client.

In my initial post here, I was thinking that if the initial downpayment was for the labor to do the installation, then the balance the client owes us would be for the equipment. (none of this is leased). And we could have in our proposal that we own all the equipment since the client has not paid anything towards the equipment yet. So if they linger a long time in paying, then we could remote in and turn our equipment off, if we want to.

I'm trying to figure the best way to approach this...as I would prefer not to have to turn off equipment either. I just want them to do what it right and pay for what they signed for.

After typing all this, I kind of like the lower price for credit card payment.

What does everybody think?

[golfnut]

Just apply the 80/20 rule...

Two options:

1) Get the entire payment -before- you start the install. If they don't want to pay the entire amount, give them references or walk from the deal.

2) As part of the agreement, have the customer provide a credit card and signed authorization to use that card for the remaining balance if not paid within x amount of days after installation. No payment for the balance, charge the credit card. If the user reverses the charge, send the credit card company the signed copy of the authorization for the exact amount of the charge.

Make either option a business practice and you'll be able to spend more time with your loyal customers.

Greg

[InfoH]

I agree, looking at it from the customers point of view..

I wouldn't mind paying the entire fee up front infact a lot of people expect this.. (in my job anyway)

but having to pay 2 seperate bills can be a little confusing to some people.. you got to remember the world is full of idiots

If they get one bill for your estimated or standard labor costs on..
maybe put in your agreement that any job is subject to a minimum 3hr labor charge as standard(obviously change this to your average labor time costs or a little higher to make sure you dont lose out)
so put that on aswell as the cost of the equiptment

heres an example I had not long ago:

I purchased a product, and purchased the shipping with it.. it got delevered..
then 2 days later i received a letter stating that the shipping company wanted an extra £8.. I ignored it for 2 weeks cos I already had the product i wanted and couldnt be bothered to visit the post office to pay their stupid gyro cheque.. lazy i know.. but many people are..

[BobY777]

Hi InfoH:

Thanks for your post and thoughts on the subject.

Yes...maybe being a little lazy is part of why some people don't pay. This particular client; I think they border on being crooks. If we don't eventually get the money, we'll be going to court.

We really want to keep a good relationship with clients. In about 10 years we have only had about 4 really terrible clients...well maybe 5. So maybe we were pretty lucky...lol. 3 were hotel owners. The owners from big corporations are nice to deal with though.

This most recent place appears to act like crooks. They aren't a hotel. They seem to have no intention of paying. I guess we were too kind in extending credit to them. Something happened to their in house network that took out their email and web hosting...I'm not sure what it was. They call us up, like nothing is wrong and ask for our help. We immediately referred them to our attorney.

So their web site and email is still down...and that was a few days ago. We won't lift a finger to help them until they get their looooong overdue bill paid. That is what our attorney says we should do. Too bad there are that kind of clients around. I'm sure not having their email working isn't good for their business.

They got themselves in this bind by not taking our advice a while back. Maybe they thought we were just trying to sell them stuff they didn't need. We never ever do that.

We advised them that they could have problems if they didn't install certain hardware. They cheaped out with hardware, and ran into problems a little later, like we told them they might. Then we had to scramble and put in what we originally told them to, and now they don't want to pay part of the bill...as evidenced by them completely ignoring it. I guess they don't like it cause we were right in the very beginning about what they needed to do.