8 ms·

Overwhelmingly: Send a quote for the upcoming year, get a PO number corresponding to the quote, send an invoice referencing the PO number, wait an interminable

• linuxfault 12y ago
  NET 30 baby
  • ceejayoz 12y ago
    Given that @patio11 can have "late" checks, I presume there's already such a thing in place. The problem is what you do when they let 30 days fly by. Many of the recourses available to you aren't worth the risk of losing the client by being a hard-ass.
  • patio11 12y ago
    The customer believes that it paid NET 30 ("You received the check within 30 days of us deciding to send you a check. NET 30!") and that I can speak to Legal if I want to press the issue, which (naturally) I don't. As near as I can tell, this is just priced into everyone's expectations.
    • linuxfault 12y ago
      Yea obviously. Sales absolutely hates when they get their commissions frozen because the customer hasn't paid in 3 months.
    • toomuchtodo 12y ago
      Do you ever consider charging more as a premium for the delay?
      • ceejayoz 12y ago
        https://training.kalzumeus.com/newsletters/archive/enterprise_sales https://training.kalzumeus.com/newsletters/archive/enterpris... > For example, a big company happily using the $250 a month plan could, quite possibly, be happy to upgrade to a $5,000 a month contract if you offered them the right incentive. (Twenty times as much, you ask? No, transitioning from "pocket lint" to pennies. Stop thinking like a human. Think like a corporation. Corporations are like humans whose smallest increment of currency is the largest paycheck you've ever received.) > This is important: Enterprise pricing is discontinuous with normal pricing. If the $250 a month plan entitles you to 500 foozles and an Enterprise needs 5,000 foozles, that costs thousands or tens thousands of dollars per month. If an Enterprise only needs 500 foozles, that costs thousands or tens of thousands of dollars per month. If an Enterprise only needs 50 foozles, that costs thousands or tens of thousands of dollars per month. This is partially justified by the amount of pain you're signing up for by doing an Enterprise sales process, but is mostly just pure, naked price discrimination. Enterprises are not price conscious. Don't attempt to sell them based on your price. ( For prices customarily contemplated by software companies.)
      • refurb 12y ago
        I was wondering about this! Has anyone tried it? I know in my industry (pharma) we offer "prompt pay" discounts to our customers. 2% 30 net 60 for example (payment due in 60 days, get 2% off is paid in 30). Of course a huge corporate has a lot more leverage with regards to terms than a small contractor.
        • gjoeworm 12y ago
          In my experience, this results in MegaCo taking the 2% discount, and still not paying within six months.
        • BHSPitMonkey 12y ago
          How does that work? Do you send out the first invoice at 98% cost, wait 30 days, and send a second 2% invoice if the payment still isn't there?
    • HeyLaughingBoy 12y ago
      It's really sad that it has come to this. I hang out on a forum where the guys are thrilled when they get a Net 30 check within 45 days. I have a customer (my only semi-regular customer, sadly) that pays like clockwork. Seriously, I've learned that I can go to the mailbox 32 days after I sent an invoice and their check will be there. I hope it lasts!
  • mikeryan 12y ago
    I've found very few Enterprise customers comfortable with NET 30 terms. We're an interactive agency any deal we do is worth a considerable percentage of our annual income so we don't get too hung up on payment terms unless we're in a cash crunch. NET 30 is "nice" but if you can't do a deal because the terms are NET 60 instead of 30 then you need to figure out why cash is so low... I've had 45/75 and once 90 day terms forced down my throat. That being said a lot of my clients who have really long payment cycles can be very flexible with us on billing milestones (like 50%+ up front - heck we've had 90% "down" in decembers). These days all my invoices are done electronically and I have to be honest at least for us we don't often get bills more than a day or two late. I have however learned when we were smaller that generally if something was more than 4-5 days late something was off on the invoice being processed. I stopped giving folks leeway more than about 3 days before I started hounding folks. YMMV.
    • eitally 12y ago
      Agreed. Net75 and Net90 usually only happen when there is something else in the deal that's favorable to the supplier (like a down payment, or a consulting engagement, or co-marketing, or similar). They get something, we get something.
• jpkeisala 12y ago
  Bigger company less they care about due dates on the invoice.
• cpncrunch 12y ago
  They can speed things up if they want to. I hope you're not providing your service for free for 9 months. At some point you need to give them a deadline. It's easy with SaaS, as you can just flick off the switch if they don't pay. Obviously with a large, important customer you don't want to immediately deactivate their account if they are overdue by a day, but you have to have a limit!
  • eitally 12y ago
    Can confirm! My company's typical turnaround time when requesting a PO for non-critical stuff is probably 10-14 days (and trust me, it irritates EVERYONE!), but if someone absolutely has to be paid or something absolutely much be obtained ASAP, we break all our internal rules and can get same day POs. This is obviously not something to be abused, but I wanted to emphasize that you're right. I encourage everyone to write into their terms what will happen if payments are late. It would be insane not to. Also, it is a jerkwad thing to do (for some definitions of the term) to right in a destroy clause into your terms (e.g. "When you stop paying maintenance on this software, you must stop using it.") but it really does lock in large enterprises who frequently don't even remember the name of the guy who set the thing up in the first place, and can't imagine committing current resources to figure out how to stop using it. I feel like I sound either really bitter about my job or that I'm a really awesome enterprise IT manager. :D I'm not sure which is closer to the truth.
  • tonyedgecombe 12y ago
    This is my strategy for my desktop software, I always make sure the purchasing department and users know ahead of time what is about to happen.
• amirmc 12y ago
  The missing step here is the 'internal champion'. It's usually possible to speed things up if someone within the company is able to push things. I've done this for certain suppliers when we've negotiated favourable terms so I spent an additional 2hrs figuring out exactly who I had to nag to get it expedited. Of course, it's easier not to care but you can make it a negotiating item (if that's part of your sales process).
• eitally 12y ago
  Here repping enterprises, can confirm this is how things work. But we don't pay late out of malice. Often incompetence and apathy, sure, but we don't actively set out to cheat you guys. We start our Net-X countdown clock at the very last moment, and typically that is when we start receiving the service (not when we agree to a deal). This seriously irks most vendors, but they seem to have been beaten down and conditioned over such a period as to just deal with it. Ultimately, the goal of an enterprise (or any business) is to have revenue that exceeds expenses, and a super simple way to maximize this on a periodic scale is to ensure your AR period is shorter than your AP period. Iirc, we're currently standardized on Net-45 for receivables, down to Net-30 whenever possible, and start negotiations with Net-90 for AP, usually getting down to Net-60. That extra 15-30 days makes a huge difference sometimes in positive cash flow. I don't endorse the behavior but it is what it is. Another "trick" to save money is to negotiate an annual contract into quarterly (or other periodic) payments. For one $1.5m/yr contract, for example, that saved us something like $200k/yr. We pay by ACH whenever possible (it is cheaper and easier for us, by far, than writing checks), and part of our vendor qualification process includes getting bank details. We do write thousands and thousands of checks, though. :)
  • tankenmate 12y ago
    In the EU there is the better payments directive to handle exactly this problem; big companies dragging their feet with smaller suppliers. The law requires NET-30 unless otherwise specified and anything above NET-60 in a contract is normally considered unconscionable. Of course the big companies can fudge that by complaining about issues with supply or by querying amounts, not enough description of supplied services, SLAs etc and delay it that way; but the big companies do run the risk of the regulators coming down on them.
    • pkaye 12y ago
      So how does it work in reality? Do big companies violate these directives? Do the regulators fine them?
      • eitally 12y ago
• bigiain 12y ago
  On the plus side, there's also often very little motivation for the person doing step 2 "provide a PO number" to not sign up for a dollar amount that comfortably covers your expected "interminable amount" of time you'll be providing their purchasing department with credit. You _do_ need to anticipate and factor it in up front though - you can't come back 4 months into the process and say "hey, the price just retroactively went up because you're so slow paying!".
• rtpg 12y ago
  aren't late fees the solution to this? I don't know exactly how you have to set it up in the signing contract, but if everyone's always paying you late then putting a "after 60 days a 20% late fee is applied" seems like a good way to either get paid or get more revenue (and in any case get your invoice taken seriously). In college I was part of a junior enterprise (basically an outsourcing firm for students), and we figured out really quickly that the due date was the pay date after consistently applying late fee logic. Saved us a lot of back-and-forth.
  • andyjdavis 12y ago
    In theory late fees would work well but in practice a large enterprise dealing with a small supplier is likely to do one of two things: 1) Flat out refuse to agree to late fees. They get removed from the deal or the whole thing is off. 2) Simply pay the original amount and ignore whatever late fees you have added on. Don't like it? "Speak to accounts", "we don't have a process for that", "these fees aren't on the paperwork that I have here", "speak to your point of contact", "I don't know anything about that", repeat. It all comes down to who needs who more. A large company has a mountain of suppliers to choose from and they are often fairly easy to replace. They have potential suppliers trying to get in the door all day long so if you don't like it you can show yourself out. Meanwhile a small supplier only has a relatively small set of large customers they could possibly do business with and they are very hard to get.
  • deleted 12y ago
    [deleted]
  • pc86 12y ago
    > putting a "after 60 days a 20% late fee is applied" seems like a good way to either get paid or get more revenue That is laughable. The only thing it gets you is ignored. The most aggressive late fee I've ever seen agreed to in any contract is 1.5%/mo starting on day 121 (original was 2%/mo on day 31). Any company I've worked for that has had more than $100MM or so in revenue has simply refused to sign any contract with any sort of late payment penalty, but they would sign 2/10 net 30 contracts all day long. Some companies even require that their accounting department follow any terms for a discount.
• ibejoeb 12y ago
  I typically bill a 3-year license on an order form in advance, which basically follows this procedure. It gets settled several months after invoice. For services, I provide a statement of work and an invoice. Perhaps unexpectedly, I did 2% 10 Net 30 for gov't, and I was almost always paid on time.
• zura 12y ago
  Another interesting question: Who decides in the Enterprise that the given price makes sense? And how it is done... You mentioned six-figures - it can be low, mid or high six.. So does anybody thinks about this there? :)
  • eitally 12y ago
    It depends who's asking, whose budget it hits, what the capex forecast looks like (if it's capex at all), whether the street is currently favorable toward opex (typically reported as "SG&A cost" or "administrative overhead") at the corporation, and how badly the company needs what you're selling. Internal politics weighs heavily, especially in prioritizing spend. Some things that are really important get ignored just because the stakeholder can't sell it to their exec sponsor. Some things that are complete wastes of money are bought because of the opposite. Sales is freaking hard and the only consistently successful way to work with large companies is to bend over backwards to get to know them as well as they know themselves... almost to the point that you're consulting for them.