“I REFUSE to Work With Companies Who Pay on 30 Day Terms”
Mark runs a two person design consultancy in Manchester. Preferring to stay anonymous beyond that, he tells us why he has started refusing to work with companies who operate on 30 day payment terms (or even more in some cases). Over to Mark…
We shop as consumers day in day out. We walk into a supermarket, pick up a basket of shopping, pay for it and leave. Can you imagine getting to the check out and asking the staff member there if you could pay for that shopping in 30 days?
Quite rightly, you’d be refused, probably laughed at and potentially removed from the store.
But imagine going a step further and not just asking if you could pay for your shopping in 30 days, but telling that staff member that you’re taking the shopping now and you will pay for it in 30 days time whether he or she approves or not.
It sounds ridiculous, doesn’t it? But that’s what small businesses put up with day in day out, particularly when servicing larger businesses.
I have been running a design consultancy for over 5 years now. When I was first made redundant from my job, I panicked and went about looking for work – any work. I ended up with a terribly badly paid freelance gig. The money was dire. But working on my terms, in my home during hours that suited me was a dream come true. So I stopped looking for full time work and moved my focus into finding freelance clients.
I spoke to everyone I know to find out if they knew anyone or worked anywhere that might be able to use my design services. Frankly, straight out of a job and launching a freelance career without any planning or even intention meant I was taking on any old work at any old budget level.
But it soon paid off. My work was coming in dribs and drabs and little bits. But then finally a referral that would pay dividends. A large company wanted me to do a complete redesign of their websites – 3 of them. They were large sites and it was a big job.
They needed it urgently.
At their request, I cancelled some other jobs, managed to move a few deadlines and agreed to prioritise this new work. The money was almost double per day what I was getting from other contracts.
So I worked the entire month on delivering the job. The client was over the moon. I issued an invoice (naively, I know) upon completion with a request for immediate payment.
“I’ve sent this to accounts Mark. They pay on 30 day terms, but it’s the next pay run after the 30 days has lapsed so they’ll let you know when that is.
I panicked. If I wasn’t paid for a whole month, I wouldn’t be able to pay my rent.
I called accounts.
“The monthly payment run was a week ago. You’ll just miss our next one, so you’ll be paid in about 7 weeks.”
WHAT THE F**K?
I explained my situation politely but was told simply,
“These are our standard payment terms. We change them for nobody.”
And that was that. I contacted my parents and asked to borrow money to tide me over. They happily helped, but it was embarrassing and uncomfortable.
I was naive. I didn’t have a clear idea of payment terms in my head (I now work on 50% up front and 50% due within 7 days of completing projects and I’m non negotiable). But equally, I felt I was right to be angry.
How can this be ok?
We do same day payments. Nobody these days has to physically transport cash to a bank or wait nineteen years for a cheque to clear.
A company paying on 30 days is basically like that company taking out an unauthorised credit line at YOUR expense. And it’s not ok.
And I get it. Cash flow. But someone else’s company’s cash flow is not my problem and it certainly shouldn’t cause me cash flow issues of my own.
So I no longer work with companies who refuse to meet my payment terms. And I encourage you to do the same. Let’s stop letting big companies bully little ones into poor payment terms.
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