First, I hope you gentlemen & ladies are doing well today. I wanted to touch base with the group and see how you all were handling unpaid past-due invoices and try to stop some of the bleeding at my own firm. For reference, I'm a sole prop in the Mid-west providing structural services, typically in the commercial/residential sectors.
Usually, my engagement letter has our billings on net 30 terms for perhaps about half of our clients and pay-when/if-paid terms (usually the AIA or DBIA template agreements) for the other half. Full disclosure - I've been stiffed repeatedly on the second group of clients and I have not enforced lien rights as I should have previously (school of hard knocks learning I suppose). I have a meeting with a local attorney to get a handle on the lien foreclosure process/timeline requirements in my state and determine how to best handle that going forward for future projects, but I'd like to poll the group and see how you folks are handling these jokers at your firms. For reference, the lien window in my state is 60/90 days (R/C) from the last date of service. Here is my process as of today:
1] We send our invoices monthly for services performed in the prior month at the start of the following month (eg. invoices are sent Jan 1 for work done Dec 1-Dec 31).
2] Payment reminders are sent 10 days prior to the invoice being late (around 20 days outstanding).
3] Payment reminders are sent after the invoice is late (31 days outstanding).
4] Payment reminders/account statements are sent at 45 days outstanding (15 days past-due).
5] I start reaching out personally at 30 days past-due - usually an email, followed by a call if I can't/don't get in contact with them.
6] at 45 days past-due, I start to become a bit more firm with the language and send another reminder - eg. "When can we expect payment" vs "Hey, reminder about this bill".
7] at 60 days past-due, I halt work on the project (if we are still moving forward). I'm not 100% sure if this should be moved up if it was the terminal invoice for our design services (eg. we are billing for 100% CD's with the expectation to begin CA at some point)? Intend to ask the lawyer about this.
8] This step isn't currently implemented but my thought is to send a notice of intent to lien at 75 days PD with a 10 day cure period and then formally lien at 85 days past-due (115 days outstanding).
I've been perhaps overly generous in the past as a result of a bad experience early. Fairly early after opening my firm, a significant client basically fired us from future projects (recommended we not be retained for future work) for threatening to stop work as a result of unpaid invoices (they were informed at ~45 days past-due that if their invoice got to 60 days past due, we pause work until they were able to bring their account current). In hindsight, I probably should have just terminated their contract then and there but I have a bad habit of people pleasing that has gotten me in trouble in the past.
Anyway, Thanks for reading and your response!