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I work for a small managed service provider. The owner is almost always late paying my invoices and I usually remind him a couple times. In addition to the invoices, he requested I fill out time sheets in the proprietary system he built. Recently he said that my invoice doesn't match the time sheets so he fixed the time sheets for me but won't do this again. I'm not sure what the mistakes were but I actually copy the data from the time sheets to my invoices. What should I do to have him pay on time? Some of my ideas are

  1. tell him that he has a certain number of days to point out any errors/inconsistencies but he can't withhold payment for over a week without saying anything
  2. charge a late fee for late payments
  3. suggest that we only use invoice or time sheets as they seem redundant
  4. suggest I can test and fix bugs in the time sheet system he made
  5. suggest that if something looks wrong or is inconsistent, he sends me a screenshot and documentation

I've actually noticed a bit of a pattern of him claiming I made a mistake and when I provide him evidence I didn't, he drops the subject but doesn't concede. Another time he told me he reset a password that I needed to use. He said he recorded the new password in a particular system. This system was big and I sent him screen shots of all the logical places I thought he would have saved it. I don't think he even looked at my screenshots and just told me it was there in the same place I sent him a screenshot of. Finally he sent me a screenshot with the password in the system, I think he has a view that is different than mine when logged in. I had already messaged him that this may the what was happening and he just didn't respond to this comment, and it seems to me this is an unresolved technical issue.

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  • You should asked this individual what mistakes specifically you made, since when did the client, tell them how to invoice them? Sounds like you need to write yourself a better contract, or better clients, that actually pay you on time. It sounds like time sheets should generate the invoice, in that the time sheets, are the details and the invoice is just what is owed. Are you a contractor or an employee of this company, it sounds like, you might not actually be a contractor Commented Jun 27 at 12:23
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    You said you get paid twice a month, I would add a late fee to invoice 2 if invoice 1 is still unpaid. As for fixing his timesheet and testing, don't, definitely not for free and since he already has trouble paying you just don't do it. "Any discrepancies need to be raised within 5 business days. Otherwise, I’ll assume the invoice is approved" keep in mind that the invoice being approved doesn't mean instantly paid, in the UK for example it's common to give 30 days from invoice date to pay. State where you're from and what the contract says. Commented 2 days ago

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I spent 10 years as an independent contractor working direct with clients (no recruitment agency in between) and chasing them to pay is unfortunately sometimes just part of the work you have to do.

Most clients (even smaller ones) will pay on time but every now and then you get one who just seems to have an excuse every time you remind them - at that point you have to decide how much you need their income stream, and whether it’s worth the hoops you have to jump through to keep it.

In your case, I’d simply submit your invoice and attach a copy of your own timesheet and a copy of the client’s timesheet (use the printscreen key if you can’t print to pdf). Then, if they complain the timesheet is wrong you can ask them which bit is wrong on the copy of their timesheet that you included with your invoice.

And review any late payment terms in your contract - you can’t suddenly add terms unless they agree to them. Luckily, in the UK there’s a statutory law called the “Late Payment of Commercial Debts (Interest) Act 1998” which lets small businesses charge the Bank of England base interest rate plus 8% on debts older than 60 days. You don’t even need a reference to this in your contract as it’s a statutory law - I only ever had to gently mention once in 10 years that I’d be charging interest from date xx/xx/xxxx and the name of the Act, and the invoice was paid the next day.

However, even if you fix the timesheet problem, be prepared for another smokescreen - the sort of person who quibbles repeatedly over timesheets is certainly going to have other delaying tactics up their sleeve.

Ultimately if you’re losing a lot of income because you’re chasing payments from one client rather than working billable hours, have a think to yourself about whether they’re worth the hassle of doing business with…

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  • Do you recommend I at least push back so he doesn't think he can treat me like a door mat? For example in our next meeting I can ask which inconsistencies caused the delay in payment. Commented 2 days ago
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    You need to re-frame it - your comment is based on emotion and frustration about late payments - “push back … treat me like a doormat” but what you really need to be presenting to them is a more objective “how can we reduce the delays in payment?”. If they say your timesheets have mistakes, smile nicely and ask what specifically was wrong. Keep evidence (e.g. screenshots) of what you originally submitted versus the “corrected” version, and see if it’s material discrepancies or just massaging the data (e.g. if they allocate different cost centres / categories, etc). Commented 2 days ago
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    If they’re truly just selling you a load of old flannel and deliberately delaying payment you’ll need to decide if you want to keep the client or find other work, but that’s a value judgement for you alone to make. Commented 2 days ago
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I'd like to directly address the comment you made in one of the answer:

Do you recommend I at least push back so he doesn't think he can treat me like a door mat? For example in our next meeting I can ask which inconsistencies caused the delay in payment.

Think about what happens if you don't pay your utilities bill. Will the utilities company call you, complain that you treat them like a door mat and ask why exactly you can't pay? No, they will send you a payment reminder, then another one with a late fee, and then they will hand the issue over to their lawyers. Somewhere in between, they will stop providing services to you. Nobody in the utility company gets angry, it's all part of doing business.

I know it's hard, but you also need to get rid of your emotions in this regard. You don't care what caused the delay in payment. That's, frankly, none of your business. Your contract says that bills must be payed within X days, otherwise a late fee of Y and Z% interest applies. If the customer pays within those X days, fine, otherwise you send the payment reminder with the late fee. If the customer then calls and complains, you might waive the fee if you like the customer and it was an honest mistake, but that's your decision.

Now, it's possible that your contract does not state these things. If it doesn't, that customer has taught you a valuable lesson. Be sure to fix this when the contract is up for renewal.

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    +1 - agreed about removing emotion, but as a self employed or sole contractor the dynamic is a bit different to a large corporation - if I had an invoice go late I’d discuss it with the project’s budget holder (who sometimes had no control over the actual payment process) and keep them informed if it needed to go further - it was a much more personal touch than a utility company sending round a van to disconnect you for non-payment :-). But still, as you say, get the right terms in your contract and use it as leverage where needed. Commented 2 days ago
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    @mclayton: I agree completely. My main point was to shift non-payment from being OP's problem ("I have to beg to get my money") to being the customer's problem ("the late fees and interest keep accumulating, I need to sort this out quickly!") by changing the "default process" that happens in a non-payment situation. Of course, on an interpersonal level, there is a lot of nuance possible. Commented 2 days ago
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You are describing red flags of a business that is likely poorly run or doesn't have enough money to pay their bills.

You didn't say if you are billing monthly or weekly, etc. If you aren't billing weekly, consider insisting to go weekly. Use the "if there are any questions we can address them quickly" as a reason. It limits how much money you'll lose if or when they stop paying.

A business that chronically doesn't pay on agreed terms is either sloppy, or doesn't have money to pay. Sloppy can be fixed if they want to. But, homegrown systems for AR/AP isn't the best use of a small tech company's time. There are way too many inexpensive options that do a great job for that.

So - homegrown timetracker is a second red flag. If a business owner really thinks their time is better spent maintaining a homegrown system than focusing on getting and servicing clients or learning new tech is really running a hobby not a business. Before anyone DVs over this statement - the excuse of creating the homegrown system is learning new tech doesn't hold water.

As a contractor (at least in the US), you do not have anywhere near the rights of an employee.

If you are hoping that someone can give you ideas how to get this person to pay on time, that isn't going happen. They either appear to not have the resources or not the respect to pay their bills.

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    "homegrown timetracker is a second red flag" his justification to this is he's selling the system (which includes the time tracker) to clients. But I get your point. Commented Jun 27 at 18:25
  • Invoicing is twice per month. Commented Jun 27 at 18:26
  • @ClanLatin Is it a hyper-niche market that the time-tracker offers great additional value of the very inexpensive generic offerings? Commented Jun 28 at 14:40
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You are assuming that the owner is correct in his criticism and in his delay in paying. That assumption is often wrong. Many small businesses have trouble paying their employees and contractors. This can be due to cash flow problems because their customers are slow paying or it can be due to mismanagement by the owner. (Once, I owed subcontractors a lot, had only $10 in the checking account, but had thousands that hadn't been paid by my clients. I was open and honest with my subcontractors and paid them as soon as my clients paid me.)

You ask, "what can you do to make the owner pay on time?" Ask the owner, not us. You need to know why payments are late and why there is a pattern of late payments and criticism. Then, follow what the owner says will work.

Most importantly, if this owner is not paying in a manner that fits your needs, find someplace else to work.

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  • Our business has around 10 business clients that pay a fixed monthly fee. So I'm a bit surprised cash flow would be an issue. Also I noticed the owners home and car are very nice and expensive looking and he travels a lot FWIW. Commented Jun 27 at 18:33
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    @ClanLatin Cashflow is a lot about how the owner spends the money, not just about income. Commented Jun 28 at 13:29
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    The nice home and frequent travels may be the reason why the company has no cash. Commented Jun 28 at 17:32
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You didn't mention your payment terms, so I can only assume that you may not have defined them in whatever contract you have with this business. So that's one issue. Payment terms essentially defines how soon your customer is required to make payment after you turn in the invoice. Certain payment terms may specify a discount that the customer can deduct if the payment is made within a given number of days. I've met people who are skilled in their trades but who had no clue on such a concept, and it's really saddening to see how such a thing causes instability in their finances because they leave it up to the customer to decide when payment should be made.

All that said, I'm not sure payment terms would work for this particular client in the long run. You'd be better off working on a retainer basis with this client, like an attorney, where the client prepays for a given amount of your services and your invoice depletes from your retainer rather that you having to pursue payment after services are rendered. This person just seems problematic and you're going to either have to set more boundaries about getting your money OR find someplace else to work.

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