Posted by jackpar on 2/22/09 10:38am
Msg #278402

Why you should accept jobs that pay 45days

This is my first post and I am bracing for the comments. However, as a retired banker, I think some of you are missing a lot of good work. It is common in the business world to pay 45 days after the job is completed. It is almost the norm. If you are all so busy that you can afford to turn down a signing company that pays 45 days instead of 30, more power to you. But if you aren't busy, why not take the work---you are still going to get paid, allbeit a little later. I have been in the Notary business for 8 years now and the only actions I do take when someone that is known to pay late, is to sometimes charge them a little extra. As a business person you should you really should consider taking thoses jobs, at the end of the year you are going to make more money. Good luck.

Reply by John/CT on 2/22/09 11:09am
Msg #278403

Agree ... better than NO days!___ n/m

Reply by Philip Johnson on 2/22/09 11:09am
Msg #278404

Bracing?

Jackpar can you name three everyday business that accept payment in 45 days as their norm? As a retired banker did the financial institution you worked for take car notes on a 45 day schedule? Or were mortgages written on a 45 day payment schedule at your bank? The norm for most businesses in this country is 30 days and now with the downturn for one of us to wait longer than that is to risk the payment all together.

There are scores of companies large and small who have folded their tent and taken our money. To extend credit beyond 30 days to me is too great a risk and I will continue to go after my money with great vigor.

Reply by Linda Juenger on 2/22/09 11:45am
Msg #278405

Re: Bracing?

Most morgages have a 15 day grace period, which would bring it to 45 days if needed. However, credit cards are an entirely different beast. Late fees apply after the 30 day billing cycle.

Reply by WDMD on 2/22/09 12:04pm
Msg #278407

Re: Bracing?

"Most morgages have a 15 day grace period, which would bring it to 45 days if needed However, credit cards are an entirely different beast. Late fees apply after the 30 day billing cycle."

I must have a rare mortgage. My payment is due on the first of the month. I am given a 15 day "grace" period before I am charged late fees. That only gives me 15 days instead of 45 days.

Reply by Linda Juenger on 2/22/09 12:23pm
Msg #278409

Re: Bracing?

"I must have a rare mortgage. My payment is due on the first of the month. I am given a 15 day "grace" period before I am charged late fees. That only gives me 15 days instead of 45 days."

My Note reads:
If Lender has not received the full payment required by the Security Instrument, as described in Paragraph 4 of this Note, by the end of fifteen calendar fays after the payment is due, lender may collect a late charge in the amount of of Four percent 4.000 of the over due amount of each payment.
IMO, I have 30days of the preceding month plus 15 days. 45 days to make my payment without a penalty. I guess its the way you look at it. I've never been late, so I guess I really don't know.

Reply by Linda_H/FL on 2/22/09 12:32pm
Msg #278410

All due respect, Linda,

but IMO you're reading this all wrong....your payment is due on the first - you have 15 days to make the payment or you're assessed a 4% late charge of the "overdue amount" - the amount that was due on the first of the month...

You're confusing late fees with interest paid...

Reply by Linda_H/FL on 2/22/09 12:34pm
Msg #278411

Dangit...should add...

"you have 15 days to make the payment " - 15 days from the date the payment is due - until the 16th of the current month to make the current month's payment....

Reply by VioCa on 2/22/09 1:01pm
Msg #278412

Re: Bracing?

Mortgages are due the first day of the month but the payment is for the interest that has accrued the previous month. 30 days plus 15 days the grace period makes it to 45 days.
15 days is correct if the interest would have been for the comming month.

Reply by Linda_H/FL on 2/22/09 1:05pm
Msg #278413

No...that's wrong...

Go ahead - you have a payment due on March 1, - go ahead and try to make that payment by April 16 without penalty - it won't happen....your payment due March 1 is due by March 16 (15 + 1 = 16) or there's a late fee assessed on the overdue amount...

As in my post to Linda, you're confusing payment due dates with interest payments...

Reply by Linda Juenger on 2/22/09 1:44pm
Msg #278414

The way I look at this is - Borrowers closing

their loans on EOM day (Monday) the 26th of Feb have their first payment due April 1. That gives them 31 days of March plus a 15 day grace period to make that payment. After March 15th penalties apply. That is 46 days. They have the month of April to make May's payment plus 15 days and so on. What am I missing?

Reply by VioCa on 2/22/09 2:07pm
Msg #278416

Re: The way I look at this is - Borrowers closing

Payment on April 1st is for the month of March

Reply by Linda_H/FL on 2/22/09 5:09pm
Msg #278432

Linda, I think you're saying the same thing but in a very

skewed way - I read your example over a few times and I believe it has payments made in advance as opposed to in arrears....pay April's interest during April or no later than May 15....and so on....I don't think it works that way.

I think that's a very confusing way to look at it...forget about the interest in any given month - forget about interest paid in May is for April...your mortgage payments of $1,000 (example)(in the note) are due on the first...if not paid by the 16th, there's a late fee of 4% (or whatever is stated in the note....the "interest paid this month is for last month" only comes into play when a payoff is requested. No borrower, whose payment is due 4/1 (as an example) has until 5/16 to make that payment or late fees apply - those late fees will be imposed on 4/15 or 4/15 (depending on the terms of the note) - imposed in the same month the payment was late..

Reply by VioCa on 2/22/09 5:32pm
Msg #278437

Re: Linda, I think you're saying the same thing but in a very

Yes it is due on the first but you already had your net 30 and that is what I was thinking when I posted.
But forget about it it is not important and it is a different scenario that has nothing to do with a vendor client type of arangement. I do believe that we should get paid net 30. This is normal business practice regardless what others are saying. I worked in accounts receivable for a long time and after 30 days at every single company that I worked for I was instructed to start making phone calls to collect the balance due.
After 60 days one owner contacted his attorney to start the process for a law suit agains the company that was late.

Reply by Linda_H/FL on 2/22/09 5:46pm
Msg #278439

You're absolutely right, VioCa

"But forget about it it is not important and it is a different scenario that has nothing to do with a vendor client type of arangement"

Did get a bit off track - and I agree net 30 is my policy too - but I'll go 45 as long as I know in advance - not my policy to go any longer than that...

Reply by JanetK_CA on 2/22/09 5:40pm
Msg #278438

Re: Linda, I think you're saying the same thing but in a very

Seems to me this is a glass half full or half empty issue because the interest for the month is accrued one day at a time. The time lapse from the interest for the first day of the previous month would be close to 45 days until a late charge would be due, but only 15 days for the last day of the month. Just all in how you look at it.

Reply by jba/fl on 11/28/09 12:33am
Msg #312365

The flaw in this thinking/reasoning is that

after the first payment at 45 days, for example, one cannot wait another 45 days to make the next payment. Now the 'final' due date is 30 with the real due date 15. Or, if one wishes to stay on the 45 day course, then there will be a foreclosure as payments will be skipped every third month, according to the terms of the note.

If one does a job for ABC and gets paid in 45, fine. If ABC calls a second time, this new bill is due in 45, and so on for each subsequent billing, no matter how far apart the jobs may be from the other. Now, AAA Co. pays monthly, on the 15th for the previous month so with this particular company if one does a job on the 1st, that will not be paid for 45-60 perhaps, whereas, the job performed on the 27th will fund in 15-20. So, if AAA calls, would one only wish to do their jobs at the EOM, thereby being certain of net 30 or less?

As many have pointed out, the key is to notice the consistency of payments of particular companies. As others have stated, vigorous attention to the health of the bottom line is important, esp. these days when the spectre of bankruptcy and/or just folding looms ever present.

Reply by Jessc098 on 2/23/09 10:10am
Msg #278471

Re: Bracing?

I can attest that in Construction, 45 day payment is QUITE common, and truly you feel lucky when you get payment under 60 days. I was in collections in Construction (as a subcontractor). I was VERY aggressive in my collections and got the deparment's average collections down from 160 days to 60, and still didn't feel like that was good enough. Often we cut deals to speed payment, or increase the amount paid. For instance, we'd agree that a client could pay us at 90 days if they didn't withhold retention, or that we would cut a price by 5% if they'd pay us at 45 days.

Reply by Lee/AR on 2/22/09 11:57am
Msg #278406

I do. My goal is to keep the pipeline full. However, I really question your statement that 45 days to payment is the norm is the business world. Well, no, I don't question it, I'll just say you are wrong. Net 30 is the norm.

Reply by Joyce, Realtor Sulfridge on 2/22/09 2:59pm
Msg #278423

sometimes in this world of high finance, 45 days means give them time to close down and file
bankruptcy, and last time I checked there is no bailout money for us, though I do except these
signings, 30 days is the norm, not 45

Reply by Susan Fischer on 2/22/09 12:05pm
Msg #278408

"...almost the norm..." So true. When I started my

new construction cleaning business sime years ago in Idaho, I was astonished that I wasn't paid on the spot, when a project was completed. It soon became clear that when I submitted my invoice, it was put into the builder's Payables pipeline, and 45 days was indeed a norm, with precious few exceptions. Those first six months were long and very lean, working 18 hours a day, while running up my own payables for gas and supplies. Once those checks started arriving on a schedule, I started breathing easier, making my day-to-day living expenses, costs of doing business, and actually making a few fun tickets.

Your point, I believe, is that this is a business, and as in all businesses, we don't call the shots. We are akin to the subcontractors in the work-a-day world of construction, only we're in the world of remote closings. If a newbie can't weather the interim between start-up and first payments rolling in, perhaps one should find another stream of income.

One last thought: one trick I learned - by offering a 2% discount for payment in 10-15 days, many contractors chose to take advantage of that discount. 2% may not sound like much, but when taken in the aggregate over a year, it added up. Add to that a policy of a finance charge (interest) applied after 45 days worked wonders in timely payments. (Charging interest is easy with QuickBooks, but is regulated by state law, so always get a professional's advice before just slapping on a finance charge willy-nilly.) While charging interest may or many not be advisable in our industry, it's something to consider as a body, I think. I don't know of too many creditors who offer free credit.

Another last thought: it occurs to me that in general, the advent of SSs and NSAs is basically a bootstraps endeavor. Many, many in our tiny industry just sprang up, without any knowledge of general business practices. Many influences have hindered the process of our building a solid business (like the notary mills with which we are all familiar,) and expectations have been hyped to the point of ruin for some, and success for others. The entreprenurial (sp?) spirit is embodied in our industry, but is dependent upon good business practices and realistic expectations - two reasons why a solid business plan is such an important part of success.

Many thanks for your post, Jackpar.

Reply by Cheryl Anderson on 2/22/09 2:39pm
Msg #278417

Susan Fischer...

What an interesting read! I enjoyed reading your post, and you have made some excellent points. I especially concur with the fact that you stated that "we don't call the shots..." Although it is awesome to know that I can say "no" and I can make executive decisions on how I RUN my program...however...I, as a happy-go-lucky business owner, am at the mercy of conformity of what the almighty consumer is in the market for...and with the industry's competition (I say "competition for lack of a better word because I believe my competition is also my best marketing tool), I am constantly developing new ideas and coming up with better and more effectively strategic ways of getting me out there. I think it's time for me to update my business plan! I love your ideas...Thanks for your post!

Reply by Susan Fischer on 2/22/09 3:17pm
Msg #278425

Cheryl, thanks for your kindness. Wishing you all the

successes and happiness in the world, and all the patience during this year's Budget Time...<aarrg>

Reply by Claudine Osborne on 2/22/09 4:13pm
Msg #278430

Re: Cheryl, thanks for your kindness. Wishing you all the

Excellent post..Great discussion and ideas..I love my Not Rot..

Reply by npross on 2/22/09 5:29pm
Msg #278436

Re: Cheryl, thanks for your kindness. Wishing you all the

Think about it this way. You do the signing on Feb. 1st. Loan funds within 4-10 days. Title pays SS in 10-12 days. SS receives check and processes it in their system 15-25 days. SS do not pay notaries every day, so it takes another 10-15 days to process out your payment. Some SS use an outside payment services who take another 5 days to get your check out. 45 is very normal. I'd never turn down a signing because someone pays 30-45 days. A lot of times I don't even check on status till 45-60 days. My clients love me and I don't have issues collecting. With a new client, you'd always want to follow up in a week or so to make sure they have your w9 and anything else they may require. Always send a Thank you note after your 1st job...or send a Thank you email once payment is received and remind the SS/TC how much you appreciate their business.
My husband and I do between 5-15 signings a day. I also don't collect when a file does not fund. No point of loosing a client, especially if I get a lot of work from them. TC don't collect from borrowers and most of them don't pay SS for canceled files. Because of this, we have more work than we can handle and we get paid on over 90%+ of files. Every business has to take loses, including SA. I know most SA would disagree on non payment for non funded files, but then again most signing agents didn't bring in $25K last month. I know of a SA who lost a client that gave them over 15 orders in one month, 14 closed and 1 fell through. This particular SA blasted SS all over the NR and lost their business. I'd rather have 14 every month and lose 1 than nothing at all...But then again its just ME.
Good luck to all of you! Business is good and I hope everyone profits during the next few months.

Reply by VioCa on 2/22/09 6:07pm
Msg #278441

Re: Cheryl, thanks for your kindness. Wishing you all the

Yes you are right if a company calls you on a daily basis and once in a while a file does not fund then you can close your eyes.

My question to you is do you close your eyes if you get a first job from whoever SS or TC and then dont get paid. Chances are you wont get a second one from them so what do you do then.

I am at least trying to collect and wont let it go without doing anything.

Reply by jackpar on 2/22/09 6:17pm
Msg #278442

Net 30 terms are the norm 45 days actual payment is normal

One last comment, I was a business lender for a long time so I saw many accounts payable and accounts receivable agings. It is correct that sales terms and payment terms were generally net 30, however, in practice most payments were not made until approx. 45 days. As I mentioned above, those of you that demand payment within 30 days are leaving a lot of business on the table. Happy Hunting.

Reply by JanetK_CA on 2/22/09 6:34pm
Msg #278445

Re: Net 30 terms are the norm 45 days actual payment is normal

I think you have a good point - one that each of us has to make a judgement call on for each individual client. When you start a new relationship with a client, it's difficult to know what is worth it or not, and it's a determination that may need to be made over time. We are always doing a balancing act between trying to fill the pipeline and not getting in too deep with a company that may be having financial problems. That's one of the many things that make the information sharing done here so valuable. Sometimes, a risk taken pays off well. Other times, it can bite you in the a$$.

Reply by Susan Fischer on 2/22/09 9:10pm
Msg #278456

Well put, Janet. Maybe another approach would be to

set a policy of a Credit Check for every client. After all, we're extending credit on the basis of nothing except perhaps 'ratings' on various internet boards. Who else in ~any~ industry does that?

Reply by Les_CO on 2/22/09 8:07pm
Msg #278450

We are not banks (more's the pity). We are in a unique business based on trust, with absolutely no security, and virtually no recourse if we do not get paid. Although in a ‘service’ industry we do not get paid when we perform the ‘service’. Many, many businesses use the other guys buck to their advantage, or make money on the ‘float’, or let their customers finance their supplies/inventory. We don’t. We pay cash for our supplies, and extend credit to our customers. In a sane world we would demand payment in front. Daisy chains may work, but in this business many of the daisies have big thorns. Extending credit to our customers for a minute longer than they have ‘our’ money in their pocket is foolhardy and tempting fate. With all your experience as a Banker, rather than giving us poor business advice, why don’t you tell us how to get some of this “stimulus” money that your colleagues have gorged themselves on?

Reply by Eliz/MI on 11/27/09 9:45pm
Msg #312363

I know this is rather late, but I just got on the forum after a long while. I don't agree with the original poster of this thread for a few reasons. One being that we are providers of a service, that service being "notary services". Two, we are not real estate professionals and are not interested parties of any particular loan that we witness. Payment of our services should not be contingent upon whether a loan closes or not. Three, for example, would it be fair if you go to notarize a legal document such as for unclaimed money and the signee says that they will pay you once the unclaimed money was collected. Would that be fair, even though you already performed the service. Where is the guarantee for payment. How could you remain in business with such late payment terms? In my opinion, if everyone started demanding payment in advance, they will conform. The way that it is now, we don't have any real recourse. Collection efforts only further take more money out of pocket. I know for me, it is pure apprehension when I get called for a signing. I let them no upfront that I only accept payment in advance. If they don't pay, I don't accept. And I move on to the next. When I first entered into this profession, I knew something wasn't quite right with the payment terms. Something has to definitely change. But we have to stand altogether on this issue.