Customers Setting Payment Terms

[milly143]

Is it standard practice that a customer - business, not domestic - sets their own terms of payment?

In my line of work, it seems increasingly common that I call a customer to chase up a late payment, to be informed that their terms are 60 days. Surely it's up to us as the supplier to advise what our terms are.

[R1Geezer]

it's whatever they can negotiate, do you not have the agreement available for each customer so you don't call those who are within what is agreed?

[redcrx]

if they dont pay when you want them then you just have to make decision to either allow it in future or not deal with them. I have a mixture of customers and suppliers all on different terms, though we are usually 60 from end of month. Plenty of suppliers we can go to who will give the terms we need if it comes down to it.

[ChuckFickens]

There is no standard practice for this.

either you set your payment terms and if they won't agree to it then you refuse to deal with them (or at least only deal on a proforma basis) or you accept their payment terms and live with it.

[milly143]

Within our company it usually works like this, the directors quote for a job and we then invoice at the end of each month for any work completed on that job. I only become involved in the process when the money is due. We sometimes have PO's but these never state any terms so I have to work on the basis that these invoices are due after 30 days, as we would normally request. It seems to be the larger companies, and some of them are very large companies that set their own payment terms and these are always at least 60 days. For a small company like ourselves, it has such an impact on cashflow.

[milly143]

I see what you are saying, although that puts us in a bit of a tie as we can't really afford to turn down their business.

[redcrx]

so then you need to factor into account the waiting time. perhaps quote a job and then offer a % discount if paid with a set time?

[milly143]

That's a possibility I suppose.

Or I could just send the boys round.

[Barmaid]

Depending on the company circumstances, you may want to look up the Late Payment of Commercial Debts Act 1988 and subsequent regulations.

[Wak]

You could always put on the bottom of the invoice:-
"Payment due in full within 60 days otherwise ??% interest added for each month or part thereof overdue."

The ??% would possibly depend upon the rate you are charged for bank overdrafts.

[Pimpernel]

Gosh, I remember having that problem... in reverse!
The company where I worked never paid their small suppliers on time, even if the invoice was only for 15 euros without VAT: they would have to chase us for a minimum of 6 months.
On the other hand, big suppliers, with invoices for tens of thousands of euros, would get paid every month: 'we' couldn't afford to lose their business!
I wasn't in the department dealing with suppliers, but some of our small suppliers were also our clients, so they would call me to try and get their invoices put to the top of our 'to pay' pile. The other problem they had was that when they called to chase, they would systematically be told that their goods hadn't arrived in our warehouse... when in fact they had already been forwarded on to our clients (OK, some of these were bad payers)!!!
As to consumables such as paper for the printers, cardboard boxes to pack the goods, ink and toners for the printers, pallet film: the companies who supplied those would ask us to pay in advance, because we had been such bad payers in the past... So sometimes we would be unable to send goods to our clients, because we had run out of cardboard boxes, but we would still be sending them invoices for the goods which were sitting in the warehouse, because we needed the money in order to buy cardboard boxes to pack the goods!
The owners of the business paid themselves very high salaries though, + company cars, laptops, smartphones, trips all over the country to visit existing and new clients, with stays in posh hotels and meals in expensive restaurants...

[Stuart-Elmes]

You should get your customer to sign an account application form, accepting your T&Cs before extending credit, then it is clear whose terms apply.

This article explains the benefit of account application forms:

http://www.mycreditcontrollers.co.uk/Articles/credit-account-application-forms-best-practice.html

If you didn't do this, then it is possible that their terms apply, for example if they stated their payment terms on their order.