Reply to: Payment terms

[BoredBloke]

Sorted

Just spoke to the agent. I'm going to bill at the end of the week, to be paid next week, and from then on monthly with a 7 day payment. Eventually it will revert to their 28 days, but not for a couple of months.

[hyperD]

At least you wrote "tide you over" instead of "tie you over". Which was nice.

[Andyw]

Exactly !

[Pondlife]

the trouble with Pondlife is they seem to spend most of their time occupying stagnent water !

Stagnant

FFS

[Andyw]

Ditch the contract and go and get a proper job in the Public Sector !

[oraclesmith]

Hi Tony,

The 30 days payment terms aren't unusual. They're standard if you're going direct, so I guess the agent isn't getting paid much more often either. I mentioned this on another thread.

Personally I would have gone for weekly invoicing though. Credit cards (especially zero percent ones as someone has already said) will delay the day of reckoning. I wouldn't bank on the agent paying on time though - maybe more like 40-45 days if you include processing and clearing, especially if they only do one payment run a week. You could always ask the bank for an arrangment on your business account, especially as you have already got a contract and presumably some invoices as evidence of future income.

[Andyw]

AND paid your tax bills ? !!

[AtW]

Thank you for your very kind offer, but we've over 5 years of cash in our business accounts now.

Well done hyperD, that is how businesses are run when their owners care about them.

[Andyw]

Been saving all your pocket money and not blowing it all on sweets and comics?

Or did some bigger kid kick all your teeth in and you got a windfall from the toothfairy?

the trouble with Pondlife is they seem to spend most of their time occupying stagnent water !

[Pondlife]

I can lend you a couple of grand to tide you over at a really reasonable rate !

Been saving all your pocket money and not blowing it all on sweets and comics?

Or did some bigger kid kick all your teeth in and you got a windfall from the toothfairy?

[BoredBloke]

Your dad gives you too much pocket money

[hyperD]

I can lend you a couple of grand to tide you over at a really reasonable rate !

Thank you for your very kind offer, but we've over 5 years of cash in our business accounts now.

[Andyw]

I can lend you a couple of grand to tide you over at a really reasonable rate !

[AtW]

If your business has 5 years worth of cash in the company accounts then I would say this is "wasted" opportunity. If it is quick liquidable assets yielding more than bank rate interest then fair enough.

Yes, naturally it should be in assets that can be quickly liquidated - certainly some cash in bank, say 6-12 months, and the rest is in bonds or what not.

5 years is probably paranoid, but 1 year is absolute minimum IMO, 2-3 is reasonably good area.

[hyperD]

Every business should have enough cash ready to sustain zero cashflow for at least a year, better 3-5.

Alexei,

If your business has 5 years worth of cash in the company accounts then I would say this is "wasted" opportunity. If it is quick liquidable assets yielding more than bank rate interest then fair enough.



Just to put another view on this payment lark: We had several contracts with a major global top FTSE player who had just outsourced their whole accountancy department to....

...none other than our benevolent Bangalore monkey friends.

Needless to say, we didn't have any payments from them for over 5 months and we were competing for payment with companies such as TNT (who could turn around and say we're not doing business with you until you resolve our accounts) whereas we couldn't.

We finally got paid (fortunately we had stage payments - this is also negotiable and can be problematic with your cash flow) and as goodwill from the client, negotiated a much higher 1st stage payment for all future projects as a result of this.

The bottom line is that a company MUST have sufficient cash flow to allow for abortions like the above scenario and also must have cash/insurance put aside for non-payment of creditors.

We've only learnt by our mistakes and luckily, we managed to pull through.

Also, apart from being illegal to draw down cash that has been reserved for tax/VAT, some business accounts do not have an overdraft facility.