Client is Paying Late and Only After Reminders

[MCSI]

My question involves business law in the state of: VA.

I am a consultant and it is in my contract that I be paid Net 45. However, they are always paying late and only after I remind them that I should be paid.

Are they in breach of contract?

[Mr. Knowitall]

If you create a course of conduct whereby you routinely forgive late payments, you're effectively modifying the contract consistent with your course of conduct.

[antirem]

I work at a web design company and we always have clients paying late. They usually pay... we have dropped one once.. for us we have to be lenient. You have to choose whether it is ok to wait or if they need to pay on time that they know if they dont, they will be dropped as a client.

[farmer]

Get a contract that explains in detail both parties obligations, terms of payment, arbitration terms, etc. An atty can do this for a small fee or get a online contract

[SChinFChin]

I was in the "credit and collection" field for over a dozen years prior to becoming a "computer consultant". I know this problem well, as many of my "consulting" clients are small firms that needs a reminder.

While I was in the C&C field, for the large "Fortune 500" firms, typically, 25% or more of our customers are 30 days past due or more. Believe it or not, large department store are the biggest offenders. Technically, all of them, and for the large corporation, thousands of customers, are in default.

One of the guys in our C&C department sent them nasty notes, make nasty calls, we call them "Joe's bombs". He was told to stop. Why??

We did an analysis, and found that if we dropped 25% of our customers, who are in breach, we would be operating at a loss. We would have to lay off hundreds of workers. Our plant would be operating well below it's designed capacity. We're not going to find thousands of new customers paying on the button.

Then we found those that are 30 days to 60 days constantly are our most loyal customers. If they go somewhere else, as new customers. they won't get such lenient treatment. Meanwhile they help us stay profitable.

When I was a consultant, I put up with my late paying clients. In fact, I find it a good excuse to call them, they would tell me their problems, and I find I sometimes even get new jobs out of them. On the other hand, for small businesses, if you have a reputation for being a "hard nose" that jumps on your clients, soon enough, the word spreads, you won't have any clients.

In fact, you'll find that the small clients are behind with you because some couldn't get paid from their clients. One thing that one of the large companies I work for did was they hold annual seminars for customers of ours on how to "collect from their customers".

I know calling clients with reminders is not everyone's cup of tea. I know making cold calls for new clients was not one of mine's either. But if one chooses to be an indpendent consultant, it's just one of those things you would have to take on, and learn to do well.

Some companies in your field offer "support" services for an annual fee, paid up front, and customers in default are not supported till they're up to date.