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How much time does a customer get to pay?

Mark Hunt
Mark Hunt Member Posts: 4,909
How long can a customer wait to pay you before they are considered delinquent?

Does it differ from state to state?

Mark H

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Comments

  • Bill Nye
    Bill Nye Member Posts: 221
    At Mac Donalds........

    ....you pay before they hand you your food. At most car dealerships you pay before you get your car back. I was at the dentist a while back and the guy had to pay before they yanked his tooth!

    At the supermarket you pay before you push the food cart out the door. If you don't collect upon completion your chance of getting paid goes down by 50% if you wait 30 days before you bill you will wait 30 -45 days to get paid and your chances of getting paid go down to 25%.

    In the doctors office most of the signs say payment due unless other arraingments have been made previously. You have to decide if you are in the plumber/heater guy business or in the bank and trust business. If the bank loans money they charge interest, if we let people go 90 days we are lucky to even get paid. It ain't right, it just ain't right.
  • Robert O'Connor_7
    Robert O'Connor_7 Member Posts: 688
    Mark..

    That depends on weather or not you charge intrest and what the statute of limitations are in your area for attaching a lein verses taking them to court. I try to get my money when done or before....Robert O'Connor/NJ
  • Justin Gavin
    Justin Gavin Member Posts: 129
    you got deadbeats Mark

    You know you can always "hire" me out to take care of them.

  • Mark Hunt
    Mark Hunt Member Posts: 4,909
    Thanks Robert


    I ask for payment upon completion as well.

    I was wondering if a customer has any legal leg hold payment for 30 days.

    In other words, would you have to wait 30 days before bringing that person to court?

    Mark H

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  • Mark Hunt
    Mark Hunt Member Posts: 4,909
    HAHAHAHAHAHAHAHHAA!!!!!!!!


    Yer killin' me Justin!!!!!

    No deadbeats, I just don't know this answer.

    Are people allowed 30 days by law to pay you?

    As to your offer, I have a good picture of you from Wetstock. I think I will post it on our website and list your title as "over-due accounts receivable collector"!!!

    Mark H

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  • Mark Hunt
    Mark Hunt Member Posts: 4,909
    I use the McDonald's line myself Bill


    Great minds do think alike eh?

    Mark H

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  • hr
    hr Member Posts: 6,106
    Ever try

    to drive your truck out of the dealership shop without paying?

    Of course they, like most plumbers should, will extend credit. It's called a credit card!! Most consumers, these days, have one, or 6 :)

    hot rod

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  • Justin Gavin
    Justin Gavin Member Posts: 129
    I work for cheap

    A case of beer and full tank in your boat is all i require.

  • tombig
    tombig Member Posts: 291
    Fair pricing,

    customer relations, and quality work are my gaurantee of getting paid. I'm primarily an installer so most are bid. If customers want to cut down my installed price I ask them if they want to compromise the quality of the work. They usually see things my way. Service calls are few but fairly priced and immediately paid. "They got no heat if I leave w/o a check". T&M jobs usually leave a couple hours off the bill in the interest of customer relations. THAT'S the flexibility of being a small shop without 'monthly quotas' and such.

    Another current forum about pricing is gone wild. Comparing large, high overhead, service companies to small contractors is like comparing apples to oranges. I've got my niche, I like it, and no "how to make your business grow" crap is going to change my mind.

    Thanks for letting me vent.



    I
  • Mark Hunt
    Mark Hunt Member Posts: 4,909
    but


    is there any law that says a customer doesn't have to pay you for 30 days?

    I'm not trying to collect a bill here, I just want to know if there is a law on the books that says a customer is allowed to wait 30 days before paying.

    Many people assume this. Are they wrong?

    Mark H

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  • Bill Nye
    Bill Nye Member Posts: 221
    Mark

    I'll ask my accountant but I don't think there is a law. I think it was an "accepted practice" for many years.The old "we always did it that way". But I think people just use it as an excuse to jam you up. My experience with doctors and lawyers and people who have a buck were the slowest payers. My best customers were always Blue Collar workers. Many had to borrow the money and wouldn't think of asking me to wait for the money.
  • Ken_8
    Ken_8 Member Posts: 1,640
    The McDonald's example above is absurd.

    We are not servicing hamburgers. We are not picking up a car.

    We are service companies doing business. We don't pay COD when we buy materials, we have "an account." The relationship we have with our customers is akin to that of the wholesaler to us.

    COD is nice. 30 days is the "legal" time frame afforded by the 30+ year old U.S. UCC (Uniform Commercial Code) - and adopted for local commercce in all states I am aware of.

    Frequently, the tech will have to pick up a control or part that isn't even priced out yet. Like most supply houses, getting a ticket priced out, on the spot, is time consuming and wastes even more time.

    A professionally written statement or invoice off your office computer is a lot more professional than some chicken scratch field written paper - and also allows the tech to do field work, not paper work.

    30 days is the "legal standard" and anything past that should be charged interest (finance charge).

    To use an equally silly example as the McDonald's one; The meter reader for the electric company does not ask you to pay while he's there - does he?

    30 days. That's the law in my state and the surrounds. NJ, PA, and NY



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  • heatboy
    heatboy Member Posts: 1,468
    I always invoice...........

    my existing clients and don't demand payment at time of service. To do so, would be an invitation to lose clients. I don't know if that is the "correct" way of doing it or not. I always get paid. I offer discounts if paid within 10 days, then net 30.

    If someone calls who is not an established client, then payment is expected at the time of service.

    Contracting is different. There is always a set payment schedule in the beginning. I try to structure payments so I'm not holding their money and visa-versa, very long. As always, it's dealing with knucklehead builders that causes the stress.

    hb

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    heatboy



    The Radiant Whisperer





    "The laws of physics will outweigh the laws of ecomomics every time."
  • Murph'_5
    Murph'_5 Member Posts: 349
    most utilities.....

    have you fill out a credit app. and some require first month paid in advance!! also will charge a late charge on advance munys if they are late. many just want to pull the plug quickly just so they can get the re-connect fees. and did you ever have an account that did not run a credit check on yourself (and I am not talkin about the ones you set up when the flintstones roamed the earth) !!



    Murph'

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  • Geo_2
    Geo_2 Member Posts: 76
    payment

    Ken, could you please post witch article # states we must extend credit to everyone we deal with for 30 day's.
  • Ken_8
    Ken_8 Member Posts: 1,640
    Sorry, no.

    I had law in college a ba-jillion years ago and one semester was only commerce, contracts (based on the UCC) and case law in that regard.

    I used the book as a reference until two years ago and rightly assumed the laws had evolved so much since I had the class, that it was practically irrelevant.

    That fundamental point of law however has not changed. This is also in concert with our every day experiences.

    Wholesale vendors are typically 2%, 10, net 30. That IS the standard in my area.

    Also, credit cards, phone bills, utlity bills, equipment leases, Home Depot, Sid Harvey's, business gasoline accounts, local mercahnts who encourage charges, general retailers, department stores, JCPenneys, Sears, Fuel oil companies, etc. all generally adhere to those terms - or something very close to 30 days.

    If you wish to have absolute proof of that caveat, check out the consumer protection laws of your state on the state website.

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  • Ken_8
    Ken_8 Member Posts: 1,640
    Jeff,

    We do it EXACTLY as you do.

    Works like a dream!

    Bad debt? What's that?

    I wouldn't know.

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  • Carl PE
    Carl PE Member Posts: 203
    Whatever you agreed to

    Mark:

    The invoice that you or your tech hands them is a legal contract. The terms and conditions should be spelled out on the back.

    You can demand your money at the time of repair, or you can give them as much time as you feel is fair. It's all up to you.

    You can charge them any interest rate short of usury, as long as it's in writing (back of the ticket again) and they agreed to it. Most invoices say that the customer even has to pay the collection agency fees.

    Go dig through your old receipts and read a few. You will be apalled at some of the things that we all agree to on a daily basis.
  • tombig
    tombig Member Posts: 291
    Sounds like

    us smaller contractors have similar notions of billing and collecting. As you posted elsewhere, Ken, our relatively low overhead allows us to be more flexible. Bad debt? What's that? It's a beautiful thing! Gotta go make the donuts.

    Goebig
  • leo g_13
    leo g_13 Member Posts: 435
    ken,

    i believe that in my parts this is also true, unless stated differently on the actual invoice. we must also state what our per month finance charge is on the invoice, or we can't charge for it. about 2 years ago our provincial government changesd the lien act, so that customers may withhold 10% of the bill for 55 DAYS now! and all trades that hire subs, are by law, supposed to withhold 10% for 55 days, though none that i know do.

    leo g

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  • leo g_13
    leo g_13 Member Posts: 435
    ooops!

  • John@Reliable_9
    [email protected]_9 Member Posts: 122
    Ken,what's wrong with COD?

    It's true about accounts at wholesalers but before they let you out the door with anything you had to fill out a credit app. and wait for it to be approved true? Do you do this with customers or just hope they pay when billed? I also think it really depends on the size of your company and where you work. I stopped most comm. work because I found that once job is done most forgot how the job got done and payment was 60 to 90 days! 99% of my work now is res. and it's funny how when job is finished they have checkbook in hand ready to pay,sure cuts down on the overhead this way. [email protected]
  • Ken_8
    Ken_8 Member Posts: 1,640
    John, Here's a link to

    an article I wrote a year or two ago.

    I think it may enlighten you about why COD is bad.

    www.masterplumbers.com/plumbviews/2003/why_cod_is_bad.asp

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  • Bill Nye
    Bill Nye Member Posts: 221
    OK Ken,

    you are right, it is silly but then........ you have a different customer base. You have a long established business with customers that probably have been with you a while.

    I deal mostly with people who are too cheap, I mean frugal to deal with a full service oil company. These people shop the phone book and buy the cheapest oil and when they need service they shop around until some one comes out.

    If I was dealing with school systems and counties and landlords with multiple properties I would send them a bill. These other people are COD!

    Different perspective I guess. I am small time and can't afford to hang for my money.
  • jim lockard
    jim lockard Member Posts: 1,059
    collecting

    When it comes to service especially with new customers, I tend to have a call girl mentality, knowing that the service has more value before its performed then after. Accepting you check before I start work tends to send a very no nonsense message. I also use the Fedex method--when you have to have it now, thats ok but you need to pay the "now" price. I do not know where 30 days came from but I can not wait that long only to discover your not going to pay. Best Wishes J.Lockard
  • Uni R
    Uni R Member Posts: 663
    Phone bill

    Most phone bills are actually paid in advance. You get the bill before the month has started.
  • Mad Dog
    Mad Dog Member Posts: 2,595
    I think it is more of a convention

    that has been observed in Euro-centric society for the past several centuries. I've never heard of a law that "gives" them 30 days to pay. We are almost 95% COD - except for really good customers - because of people's complacency when it comes time to pay beyond 30 days. We have a couple of good customers that take 60-90 days to pay...we usually have to call and nudge them at the 60 day mark. They rarely quibble about price and send us alot of work....so we let it go. Mad Dog

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  • Mad Dog
    Mad Dog Member Posts: 2,595
    Knucleheaded builders???????????

    you can say that again. We almost exclusively WILL NOT work for contractors. In all the years doing this I will only work for one. The vast majority remind me of politicians: phony, full o' soup, greedy, cheap, liars. It gives me distinct pleasure when I meet one or they call to tell me how much work they are going to "give me," that sorry, we don't work for contractors.........Mad Dog

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  • heatboy
    heatboy Member Posts: 1,468
    I have learned............

    over the years that when a builder gets in between the client and me, the project increases 3-5%. What I mean by "gets between" is when they decide they are the ones that are going to pay me. Since they very seldom pay when in less than 30 days, the price must go up. I offer discounts if paid in 10 days, but if they keep my money for 30 days, my losses are covered.

    Builders whine because they can't find good subs. Wonder why. They seem to forget I don't work for them and I certainly don't need them. That said, I do have one guy who I will work with anytime or anywhere. I worked with him on these projects and he gets some of the coolest work.

    http://climatecadvanced.com/Projects/VanSyckel/vansyckel.html

    http://climatecadvanced.com/Projects/Barn/barn.html

    http://climatecadvanced.com/Projects/Beyer/beyer.html

    These kind of builders are far and few between, though.

    hb

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    heatboy



    The Radiant Whisperer





    "The laws of physics will outweigh the laws of ecomomics every time."
  • bb
    bb Member Posts: 99
    what's in your contract?

    That's what is will stand unless you have something that is illegal in your state. Contact your attorney for your area.

    I would state your terms clearly on your contract and have the customer sign so there is no confusion.

    Also, state your terms, 2/10, net 30? Interest for late payments, and fees for collecting, including: 1. Your time, 2. attorney fees, 3. court costs.

    Make sure to include your time, because it's valuable!

    bb
  • Ken_8
    Ken_8 Member Posts: 1,640
    Bill,

    Regular repeat customers are the lifeblood of financially strong companies. Most of us want more customers. So some new ones are a good thing. But to have a high percentage of customer "turnover" bodes poorly for any company.

    In any given year, I suspect I may have 20 or maybe 30 brand new customers I never heard of before. This does NOT include those who simply bought a house we already serviced and they just called to continue the serving folks (that would be us).

    Since we have roughly 600 accounts we see ONCE every 2-years (as a minimum), our "turnover" is virtualy non-existent! Most of the customers we lose, we lose because they expire!

    We have considered service agreements, but just never found a real need to go that route. We looked at that possibility from allangles and found it to our mutual advantage to stay with the present system.

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  • S Davis
    S Davis Member Posts: 491
    1099

    One thing I found out in washington state is you can take the outstanding bill as a loss at the end of the year on your taxes, then send the customer a 1099 and they have to report it as income and pay tax on it:-)

    S Davis
  • Ken_8
    Ken_8 Member Posts: 1,640
    Are you serious?

    Sounds absolutely brilliant!

    Have any website info on that?

    Or did you mean for Washington State Tax Law only?

    I never heard of such a thing from a federal standpoint!

    Of course we can "write off" bad debt and if on the "accrual" basis, reduce income for the year of the write-off, but I never heard of issuing a 1099 for the deadbeat to "eat'!

    Outstanding concept.

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  • Dave Yates (PAH)
    Dave Yates (PAH) Member Posts: 2,162
    1099

    We've done that too(G). Makes for some interesting phone conversations!

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  • hr
    hr Member Posts: 6,106
    Ask the customer

    when you book the call "how would you like to pay today"

    I have no problem billing a customer if they are established with us. Property mgt companies are a classic example, hotels, etc.

    A brand new small service call customer, I'd just as soon collect or have them credit card the purchase.

    Just depends how comfortable you are wuith the customer and situation.

    Renters are tricky, them may say they have OK to call in for service. Best get OK from the owner.

    Nothing wrong with an invoice that has terms spelled out. And always best to get them to sign it. Folks tend to forget when the bill shows up, weeks later, later exactly what they agreed to.

    You make the call :)

    hot rod

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