

This is why you're getting paid late - gelizondo
http://www.gethourglass.com/blog/this-is-why-your-getting-paid-late.html

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chasing
Here's a really, really basic business concept, presented in about ten times
the number of words it needs. PLEASE SIGN UP FOR OUR PRODUCT.

Also: That's not why I'm getting paid late. I get paid late for a variety of
reasons.

~~~
JDGM
"Here's a really, really basic business concept, presented in about ten times
the number of words it needs. PLEASE SIGN UP FOR OUR PRODUCT."

Good observation, and humour points for the light-hearted snark. I don't quite
disapprove of these articles, but I agree once you see the pattern it is
rather ubiquitous.

Where I am with these at the moment is questioning whether the person would
have written it anyway and is tagging their business into it (reasonable) or
writing something specifically to increase their visibility (I'm more
skeptical).

Occasionally I imagine such a writer sitting at their desk with "the big book
of business basics" saying "which one shall I write up _today_ and post to HN
to obliquely promote my product?". But then, if they're sharing something of
value then do I even care? The ones which seem dangerous are those which have
distorted something of value to specifically relate to their product. There
was one a few months ago (re)defining "Technical Intelligence" in a really
confusing way in an attempt to tie it to the business in question - absolute
train wreck.

~~~
chasing
This article sounds like someone with basically no real-world experience
quoting a professor (possibly) out of context (because, christ, what an
asshole as a CFO) and over-simplifying an actual problem to make such an
extremely obvious point it should probably go without saying.

I'd love an actual discussion about dealing with late-paying clients. This
article contributes nothing. In fact, it makes the claim that not paying your
bills on time is just fine! As long as the person you owe isn't constantly
pestering you about it, hold on to that cash! Suckers! Sorry: That's not just
fine and if you consistently do it, you're going to earn a nice reputation as
someone who's a pain-in-the-ass to work for because extracting payment takes
forever. It's not up to the person you hired to bug the shit out of you until
you decide to grace them with payment for their work.

As far as advertising Hourglass and the FREE GUIDE that's plastered all over
that page... More harm than good. Because they clearly have a very amateur
view of how business works.

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tptacek
We have full-time staff allocated to this challenge, and still have clients
that will pay us late. This is a fact of life in business.

~~~
andrewljohnson
Do you have late fees, and are they exercised? I am curious, because I
recently added said terms to contracts.

~~~
eli
I think that's probably useful to have in your default contract, but IMHO the
people who are adamantly refusing to pay you $5,000 are very unlikely to have
a change of heart when you inform them it's $5,100. Consider that debt
collectors typically offer to settle for potentially far _less_ than the
original amount owed.

One of the most surprising things I found when I started working in B2B is the
percentage of clients who simply don't pay their bills.

Like tptacek said, I think that's just the way it is and, at least at a
certain scale, the only reasonable approach to hire people to do collections.

~~~
pnathan
> One of the most surprising things I found when I started working in B2B is
> the percentage of clients who simply don't pay their bills.

What scale of company was this?!?

~~~
eli
Well, I've pretty much only worked at B2B startups (from 3 employees to ~50),
but I would assume it's an issue at all scales.

The worst was when I worked for a mom & pop consulting shop. The clients were
mostly other local business owners and getting them to pay on time was a
serious problem. Law firms were the worst. I assume because threatening them
with a lawsuit didn't carry much weight.

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antonios
Interesting article. However, I find it a little difficult to believe that the
aforementioned finance professor cared as much about "social justice" as the
author says. It's unprofessional and rude to expect someone to complain in
order to pay him.

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inerte
I used to work at a very large telecom company, and one of our clients was on
average 380 days late with their payments.

We used to say we were their bank, lending money for cash flow. Except never
charging interests :)

~~~
grimman
> on average 380 days late

What? Over a year late? How is this even possible?

~~~
bluedino
Probably a huge client. Millions a month in revenue, but slow to pay.

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praptak
I made some side money as a student by creating and maintaining a DB app for a
local dealer of a particular brand of chemical products. The owner had a
simple rule - customers pay upfront unless the sum was large enough for him to
sue for. He had a de facto local monopoly so he could afford to enforce this.
Obviously it didn't apply to trusted customers.

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will_brown
As a former vendor to a Fortune 500 Company, even said Company often paid me
in excess of their own net 30 payment terms. I can relate to "Company Y" in
the article, because my thought was if I complained my orders might shrink or
not come at all, plus I could afford it. I did not stay quite entirely I would
contact their accounts payable and try to move their hand, but it was clear
they were capable of inventing issues to justify their failure to pay (much
like I imagine insurance companies always have an excuse for denying a claim)
so I found "complaining" actually worked against my goal.

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artursapek
<http://imgur.com/BkeZuKI.jpg>

If you're gonna piss off your readers to make a few extra sales at least do it
right.

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chrisa
Sadly, this is very true. It's also a very hard lesson to learn. Even worse,
it's extremely difficult to change the behavior after it happens the first
time. If you're having trouble with this, here's a talk that helped us quite a
bit: <http://vimeo.com/22053820>

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ambiate
Ugh, our lapse rate is typically 30 days. We have companies that have lapsed
6+ months. Yet, it has been going on for decades. No one questions it and we
always seem to get paid in the end. It is just bad form for both parties. 'We
have always let them do it!'

~~~
rhizome
The _one secret trick_ that will get you paid faster: some people LIKE bugging
people every few days for late payments. Hire an admin assistant who has some
A/R skills and put them to work on your late list. "There's a new sheriff in
town..."

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codegeek
After working as a contractor (Corp to Corp) for a while, I have realized that
death and clients not paying on time is certain in this field. Yes, you can do
many things to _minimize_ it but total elimination is not possible.

~~~
TheOsiris
Always true. Clients paying on time is rare for me. Even after complaining and
making a fuss about it.

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hmottestad
I find that very greedy.

I was going to say a lot more, but what can I say to a line ending it "but
they didn't complain". Pretty sure that would justify a heck of a lot of
things.

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jerven
For large companies paying as late as possible is part of their cash flow
management. Why pay if it does not cost you? its like a free 30 day loan. So
if the terms say 30 days to pay on day 34. If your company is large enough
you, just the carry trade on income you have and expenses you have not paid
yet can make a difference on your balance sheet.

If some one is kind enough to extend it to 60 days without complaining, then
its more free money for the customer.

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RandallBrown
What advantage do you gain by always paying them late? Just hanging on to the
money a little longer so you can earn a little more interest on it or
something?

I've worked with a company that always pays me late. I've told others to be
wary about working with them because of it.

I don't see how this is a good thing since it makes you seem extremely
unprofessional.

~~~
nwhitehead
It's almost a tautology, but by paying late you keep your cash available for
other uses until you pay. Cash flow can be the limiting factor for many
(most?) businesses.

Another way of looking at it is that by paying late you pass some risk from
yourself to the recipient. Interest rates quantify both the time value of
money and the risks associated with payment in the future. Paying late without
penalty is an interest free loan.

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cowsandmilk
I find offering discounts works extremely well. You write 2/10, net 30 and
almost all customers will pay in 10 days.

~~~
mirkules
What does that mean? Someone else above wrote "5% net 7" also and I have no
idea how to interpret this.

~~~
freehunter
"2/10 net 30" mean you need to pay within 30 days, but if you pay within 10
days you'll get a 2% discount. It's called trade credit if you are interested
and would like a place to start your research.

~~~
rhizome
Ah, that's different than how it was explained to me. Thanks!

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willtheperson
It may be "good business" but she's still a bad person who is fueled by greed.

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epoxyhockey
When I worked for a Fortune 10 company, they would rarely pay a bill on time.
To get a timely payment, the late fees needed to exceed what the company would
earn off of interest on the same amount of money.

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nawitus
Some companies purposely accept getting paid late, as it's a selling point.

~~~
djcapelis
If it's a selling point, then the payments aren't late.

