what to do with clients who don't pay?

[Dave A]

Our South African based clients simply don't pay.

Ahem. All of them? Or a minority?

Then they threaten us with law suits when we suspend their services - regardless of the fact that it's in our TOS which they agreed on.

Tell them that if they don't understand their contract, talking to their lawyer is probably a good idea - and you look forward to receiving your payment once they've done so.

This is well understood, for instance, in London, UK. There are regular references to the South Africans' unwillingness to settle debts.

Apart from the fact that a few rotten eggs tend to be far more memorable than all the good ones, this is perhaps not surprising. More than a few South Africans wandering off to other pastures skipped their bills back in SA when they left. I'm sure they justified it to themselves somehow, and of course once the notion that it's OK not to pay is rationalised it's easy for the bad habit to continue.

[Marq]

My experiences are not the same, probably as I have screened my clients properly. Further, if one looks around on the web, there is no evidence of this bad South African payers and a quick check to three friends in London could not vouch for this either. My overseas clients have never mentioned this kind of problem. Bad debt ratios are no different here to the rest of the world. If my client base is mainly South African then obviously the bad ratios will reflect the same.

So this is all unsubstantiated statement based on personal bad business decisions and dealings. Is this a typical approach where South Africans slag there own for some unknown reason? It also surprising coming from one who is easing his way back into the country from a country that has a poorer reputation with bad debt and bribe record.

Obviously we get taken from time to time by some bad person or company. Most of my bad debt experiences come from Nigeria, Cameroon's and Ghana. Simple solution is that I just do not deal with them any more. This is part of business and if you haven't been taken you probably haven't been out there properly in the business world. If you do not want to go the extra bit to collect what you so righteously determined to be yours then the only other option is to write it off to bad debts and experience.

[SilverNodashi]

Marq, don't you think your reply a bit insulting? i.e that you know how to setup a good business, and no one else does?

Please don't see this as a personal attack, but you have very little (or no) right to say that someone else makes bad business decisions, and you don't - especially if you don't know them, their business, their industry or anything related. You are not the king of business, and you most certainly are not the only one who can run a good business.



Back to the matter though, I do think this is somehow related to the market, but I can't say this for sure.

A friend of mine did some IT related work for a company last year, who still owes him R15K. They did pay a 50% deposit upfront, at which point he purchased & setup expensive servers and networking equipment. But, when it came to settlement, they refused. And they had some lame excuse as to why they won't pay.

Another friend, who worked with air conditioning has similar experiences in Cape Town 2 years ago. His business has gone under, maybe it was due to the recession as well, but the fact remains his client's didn't always pay.

I see this a lot, especially in a "virtual market", i.e. where I don't come face to face with the client. They sign up for a hosting package, pay the first few invoice(s), and then "disappear".

Another friend, who is in the housing industry has the same problem with client's not paying, or delaying payments indefinitely


Generally, this is easier for client's todo in a service related industry, than in a physical goods (i.e. purchase something off the shelf) industry.

[desA]

Ok, I'm going to re-read everything 3 times, to see if I can try to understand some the above views. For the life of me, though, I cannot see how folks can see South Africans as 'good' payers. This has never been my experience at all.

I was shocked when I began consulting to a Nordic company, for instance. They came to me a week, or so before month-end & asked me for my invoice. I was amazed that they wanted to actually make sure that I received my payment at month end, as per contract.

In SA, it was always the roll-to-90-days rule for the bigger operators, unless you pushed hard for payment. In fact, the debt collection burden became a substantial portion of one's time, when operating as a single operator.

A comment from a long-time associate, now based in the UK was one of grave concern at my plans to relocate to SA, based on the rise in corruption & the fact that South Africans are known to not pay.

At the risk of coming across a little hard - I sense a fair amount of denial may be present in some of the above responses. When you've been outside SA for some time, the reality of what you guys go through becomes apparent.

Marc, I simply do not believe your friends in London - sorry. This runs contrary to everything I've heard over the past 10-odd years & I have a number of friends living, or have lived, in & around London. I have, for the record, travelled through some 30-odd countries in my international former life & have spoken to many, many folks across the globe. South Africans have a bad reputation in the business world, I'm afraid. To this list can be added that of Australians.

Other than that, cultures are all different & when you get out to Asia, you learn to trust no-one, as every business operator knows how to wheel-&-deal. If you close your eyes, you will be eaten alive. This is to be expected in Asia. If you don't pay your business bills here, you will end up face down in a canal, or with a bullet in your head from a local hitman - end of story - no police follow-through. Actually, if you become too succesful over here, you will also possibly meet the hitman - this is very common. (Tough justice... scary stuff)

SoftDux's version is very, very close to my own personal experiences. Perhaps it has to do with the market segment & whether the SA operators think they can get away with this kind of stuff.

[tonyflanigan]

I read about a tactic to use on lousy payers a few years back, and thought the guy had a cheek. And BIG balls. I recently had cause to use the baseline tactic.

Web design was done, free alteration period over, invoice delivered, client happy. Pay time comes and goes, and nothing on the bank statement. Phone client, who is amazed account has not been settled, and promises it will be done right away. Week later, phone again, and the client is 'not in the office' right now, but he can be heard in the background. Speak to his PA, who also promises etc.

Three weeks later, still no payment, and 'cos we're nice people we don't pull the website. Instead, go to their office, ready and prepared. The idea is to go there, and sit in reception until payment is made.

The dude that i got the idea from got into reception, and promptly struck up conversation with anybody and everybody. Typically the conversation would be: Do you work here? If yes, the person would be asked if they had received their salary yet. If the person did not work there, he would ask if they too were there to collect money that was owed to them.

After the fourth or fifth person the receptionist called her boss, and the monies were paid.

In my situation I never got to reception, as the matter was sorted out in the lobby.

Best of luck soft, lousy payers are a pain in the @ss.

[tonyflanigan]

• Keep on sending statement and invoice - dont allow them to think you are giving up.
• Create a website (you are in that game) - give them an advert for free and state that they have not paid you for your work done.
• Show them advert - send emails with what looks like hundreds of recipients.
• Design letterhead that says collector of debts - send letter registered post demanding result.
• Find hobo in park....make sure he really stinks. For R100 bucks he can deliver same letter - must make sure he sits in reception until the owner had letter in his hand. Hobo must then wait for response letter or payment. Try and get him to stay their the whole day. Monday is normally a good day for this one.
• Find electrical box outside building - open up - flip switch on and off a few times and then leave in off position. Do the same for water supply.
• Phone their sales department and organise for them to come and give you huge quote - tell them you need to see the head honcho with the team thats coming. Meet in Hotel reception area - Deliver letter of demand when head honcho arrives and give him the gears in front of staff. Tell him this is only the first of many such reunions if they do not pay up.
• Stand outside their building with a sign that says bad payers be careful - toy-toy a bit - its all the rage.
• Send emails to their clients - asking them if they are having any problems like you are?

I like this guy!

[Dave A]

So this is all unsubstantiated statement based on personal bad business decisions and dealings.

I'm sure it's anecdotal - no-one is pointing to a survey at this point. As to why the impression is out there - there could be a host of reasons and combinations. For example I've raised here before that when I said I am from South Africa on trips to the USA, it was not uncommon for folk there to start discussing wierd emails from Nigerians. We might know the association is ridiculous, but it exists anyway.

Back to the matter though, I do think this is somehow related to the market, but I can't say this for sure.

As you know, I've got a toe in three different service industries. I can tell you each of them has a different "payment problem" profile.

I also have four different client profiles - private individuals, SMMEs, big business and government. They also have very different "payment problem" profiles.

We can probably add some more profiles - for example the segment that gives me the most grief is start-ups. That could have something to do with your problem too.

There's no doubt the problem varies by market segment.

lousy payers are a pain in the @ss.

Agreed. Worse still it's contagious. Accumulate enough lousy payers as customers and you'll likely have to become a lousy payer yourself. This recession has definitely made the problem worse. In this aspect Marq makes a strong point - we need to filter our clients or adopt a strategy that reduces our exposure.

[tonyflanigan]

There is no way to eliminate bad payers. The only effective way, no disregard to marq and his screening process, to ensure there are no hiccups in the payment process is to collect the money up front.

Somewhere, sometime you will get taken.

[AndyD]

Find hobo in park....make sure he really stinks. For R100 bucks he can deliver same letter - must make sure he sits in reception until the owner had letter in his hand. Hobo must then wait for response letter or payment. Try and get him to stay their the whole day. Monday is normally a good day for this one.
..........- toy-toy a bit - its all the rage.

It might be worth paying R200 bucks and get a hobo who can toy-toy as well

A few thoughts:
1. South Africans have an international reputation as clients who do not pay their bills.

I haven't done business with South Africans abroad but I have done substantial business in five or six different countries and this one is the worst for non-payers or slow payers.

[Marq]

Goodday Rudi,

that you know how to setup a good business, and no one else does?

I said this?

You are not the king of business

You managed to get this out my last post?

Please don't see this as a personal attack

So what is it then?

You asked for some suggestions for your outstanding account and I gave you some thoughts. Some were serious and some were tongue in cheek. Am I to read into your answer that I would go that low and you wouldn't? Was that a personal attack? - or do I assume its just your thoughts and move on.

Des came up with a sweeping statement that may be true but maybe just his experience. You agreed with it. Bolstered, He comes back and makes some more generalised statements.
I ask for the evidence cause I am interested in whether this is true so we can look at it. If its just a feeling, hearsay and a personal experience then say so rather than make sweeping assumptions that the rest of South African, which includes most of us here on the forum, are included in these 'facts'.

Marc, I simply do not believe your friends in London - sorry.

Sorry Des, you dont even know how to spell my name and now you assume to know my friends. If you want to make statements and continue having a go at South Africans in general like that, then back it up or cut it out.

At the risk of coming across a little hard - I sense a fair amount of denial may be present in some of the above responses.

Try this psycho babble somewhere else - its not going to work here where you have been unable to produce evidence and assume to be all knowing on this subject.

But at least you make me think as to why I participate on the forum. mmmm......makes note to self.