November 28, 2011
More comments from captains and crew about yacht owners who do not pay their bills on time. To read the full report, including statistics, click here.
If you own a yacht, you have to pay the bills. I pay my bills and I expect the owner to pay his. I am not afraid to tell him so. It reflects on my reputation and I will not tolerate this behavior.
It's irresponsible and just plain rude. A boss leaving me to explain why he dodges his obligations will have me looking for a job about as fast as anything I can think of.
Always make sure that you have sufficient funds in petty cash, at least $10,000, depending on the size of the yacht. When signing on, make sure the owner is aware of payments that have to be made and when, such as crew wages, dockage and fuel. Always have a reputable and acceptable credit card for expenditures. Ensure that the owner is always aware of financial commitments made on the vessel’s behalf. This is the captain’s responsibility.
Every crew member needs to remember: boats and owners change, but good vendors will always be the same. We as crew need to keep great relations with them to do our jobs and not burn our bridges.
There's an important distinction between slow and no pay. An owner can have a catastrophic business reversal and park the boat and lay off crew. But the slow-pay owners are the most difficult to work for. For some, it's a game, a way of doing business. I won't work under those conditions. If it happens once or twice, people will blame the owner/boat. But if you stay, the reputation will become yours.
We pay our bills and the owner lives under his means.
The vast majority of invoices in the business world have an automatic payment schedule of one month. Yachting seems to want things faster, but the yacht’s bills are a tiny part of a huge business’ accounting department.
Sometimes owners are not aware of how much money they have to send to the boat. When the reality of sending checks all the time hits them, they can balk. They can have tight money situations, too. I don't like to think that they really are so mean that they withhold payment for a power play but I am sure it happens. However that can backfire on them.
Sometimes, he [the owner] is absolutely right [to withhold payment] as the work was done wrong. However, there are times he just does not understand the crux of the problem and what it’s going to take to solve it.
I remove myself from the invoice/payment process by having the vendor submit directly to the owner with the hull number/registration information included on the invoice. Many captains, more than not, skim contractors for a percentage of their invoice rather than accept or negotiate a different wage from the owner. It is the captain’s responsibility to engage contractors, but it is unethical to accept any gratuity from the job or professional relationship. I know from personal experience that vendors are ready and willing to do whatever work a captain wants for his personal use, such as a shower mat or a little varnish job, providing the vendor has not been strong armed into paying a commission on the side.Owners are only fooling themselves if they don't pay their bills, but captains are fools for playing the middle man or putting up with less than honorable service in the course of his/her duties. If yacht crews conducted themselves above reproach, owners would soon follow, and the rogue dissidents would fall to the wayside.
I have worked for mostly the kind of yacht owner who pays his bills on time. There is another habit which is becoming more common these days; trying to negotiate the bill after the work has been done. This is a very frustrating situation for the captain, who is then caught in the middle.
Most of my owners have been self-made businessmen. If they are willing to haggle over a bill, maybe I should take notice. In every single dispute, there is always a settlement where the owner pays the bill and the yard receives money. If you do not ask for a discount, you will never receive one. And there is no shame in asking. It has always been a matter of what is fair, and I believe the yards respect that. We are always welcomed back.
Captains should be open with suppliers who have not been paid in order that the blame does not rub off on them. Involve the management company immediately, if there is one.
Some owners want the work done, but then get really surprised when they hear how much it will cost. Then they say to go ahead with the work, and then dispute the account at the end.
To us in the business, these boats are our primary interest and we put priority on their care and maintenance. To the wealthy owner, it is a toy and probably low on his list of important things to think about today.
There are numerous reasons why an owner might not pay the vessel’s bills. As a captain, it is our responsibility to establish a budget for the vessel with the owner and secure the monthly or weekly funds before ordering goods or services. If we cannot establish a financial trust with our employer, the situation is not a good fit for either party.
As junior crew on my first boat, over 20 years ago, I witnessed a captain who constantly financed the running of the boat for a very wealthy owner who consistently refused to personally meet any of the vessel's financial responsibilities. His agreement with the captain was that he would periodically "settle-up" with him, paying him 1 percent over LIBOR for his troubles. The relationship eventually broke down and the captain lost tens of thousands of dollars of his own money. I have never since worked for an owner who did not appreciate the importance of paying crew and vendors on time.
If they can't pay a bill then something is wrong. It tells me that there is an inability to handle finances or a lack of respect and responsibility.
Always be direct and upfront concerning the amount of pay and when it is due.
My trouble is not so much with the owner I work for, but the internal management set up to manage the yacht side. They have absolutely no knowledge of what is involved. It’s just pure number crunching and power plays.
For past nine months I have been forking out of my own pocket to keep contractors paid. I knew that I would be reimbursed by the boss sooner or later. Stocks crashed hard; he was experiencing cash flow problems. But what would happen if he suddenly suffered bad health and fell off the perch? The boss’ wife wouldn't reimburse me if she was in charge of the money.
Captains and management companies should strive toward preset limits of approval. First level is department heads, then captain, followed by the yacht manager, then ultimately the owner.
Research your owners like they research you. Interview them and get references.
If you are with an owner that is late paying bills, do not use your trusted vendors. And if you do, let them know up front that things can run late.
I have learned many lessons with this last boat, after many years in yachting. The biggest lesson learned is to never use your own funds for anything, no matter what. You will always lose in the end. Always confirm anything with a written or e-mail message, never verbal.
I may work with this owner for two years, he may be out of yachting in, say, six years, but the vendors, dock boys, even the editor at The Triton I will work with for the rest of my career. They are my peers and any captain that would treat his peers with such disrespect does not deserve much back.
Whenever an owner is not willing to give you operating cash up front and a credit card to use at your discretion then there is a lack of trust. You are in a bad relationship that is unlikely to improve. Don't ever use your own money.
Ensure that the owner understands the captain is “acting as agent” and accepts the resultant liability. Proper budgeting forewarns the owners of expenditures so there are no surprises.
I have finally, after losing my own money, learned to get off the yachts that don't pay their bills. Read the signs: high crew turnover, black listing by contractors and shorting general yacht maintenance budgets.
After being stung for $12,000 a number of years ago, I don't front my money ever anymore. If I see warning signs nowadays, I speak directly to the yard or vendors to let them know what's happening to keep a level of transparency. After all, I'll still need to work with these people on future yachts and my reputation is important. In extreme cases, I've stopped work and made the recommendation that vendors are pre-paid on a structured basis for the work being performed. This way, I can control the potential for loss.
The better your accounting methods as a captain, the better the owner will understand what his future financial outlays will be, thereby he will “get over” the cost of ownership ahead of the bill arriving and be in a better mood to pay it, rather than getting hit over the head with a huge bill or a stack of bills all at one time.
Bosses who don't pay their bills timely are showing a tremendous lack of respect for their captain and crew. It’s indicative of a flawed (certainly sub-standard) relationship and I would not waste my time by remaining in it. A zebra doesn’t change its stripes.
After one experience with an owner who protests about needing time to pay or the check is in the mail and it isn't, I get firm with the owner and the vendor. Nothing is done next time until the check is available. I make sure the work is done properly and then pay.As for dockage, overdue vendor and other routine billings, the business manager is contacted for payment. If the owner is responsible for sending the check and it doesn't get paid regularly then I had checks on board for these routine payments.In my early years as yacht captain I paid for these items from my own pocket if the money was not sent. I had a boat sold at a Marshal sale for nonpayment of my invoice. I said never again and you should, too.It is not the captain’s fault that the owner does not pay, especially if they agreed to the estimate/repairs/running expenses.
I work for a first-class owner who trusts that when I spend for the yacht it was a well thought-out and justified expense.
Sure, there may be exceptions, but overall I do enjoy the gentlemen arguments, their preparation, their points of negotiation. Even now, I still glean good strategy from these experiences. Where an owner is often disputing a bill that is equal to two or three years of my salary, I side with my owner. As for owners who simply do not pay a bill, I would not consider working for them.
I had one bad experience in my previous yacht with an owner accepting a quote and changing his mind after the repair was done. Out of respect to the contractor, I paid the $10,000 repair and asked the owner for reimbursement. After some screaming, he paid me back and I resigned two months later.
If salaries do not arrive on time and there is no acceptable explanation, inform the crew. They have a right to know.
Get your own company checking account from which you can pay the bills. If you don't have the money in the account, then don't schedule the work. This way the captain has full control over the bill paying and has to request money when his boat account is low.
Most crew know about these owners and steer away from jobs on these vessels. These owners then get the lower end of the crew pool as these are the only ones willing to put up with this rubbish. This, in turn, causes more problems and more yard periods to fix these problems, and around it goes.
Having a contract as to the captain's responsibility on vendor payment and crew pay is helpful, but as soon as this becomes a "habit" the crew has to make up their mind to stay or leave. The key element between a captain and owner is trust, and once the owner stiffs the captain or crew, this trust is gone. As a captain in this situation, I no longer book any work on credit without a check or valid credit card from the owner.
Keep ahead of the game by trying to get a buffer built in on budgets, by trying to remind the owner directly of the the consequences of late payment of invoices and salaries, and by giving direct contact details quietly to the vendor or shipyard so they can deal with the problem themselves.
It is so important for a captain (and vessel) to build a positive fiscal reputation and good business relationships with quality contractors. When push comes to shove and a vendor has to make a choice between two boats with desperate needs, where one has a great reputation and the other a terrible reputation, it's obvious who will get their support.
If at all possible, don’t pay with your own money and hope to get reimbursed. It may take longer than you think or than they (the office or boss) say it will take. Why should a captain be the bank for a million-dollar-plus yacht?
If your boss does not pay you, it's simple: sue them. This practice [of not paying bills] needs to be driven out of the industry. A future employer will respect you and realize you are in the right for leaving. A boss of mine offered to help with the legal fees to sue a previous boss so I could get my money. I won.
It’s very embarrassing when a vendor tells you the bill is unpaid, especially when they have let it go for a while. From now on, I would refuse to do a trip or a charter if a bill is continually unpaid. It’s not fair on the crew or the vendor for a rich guy to keep his money and still use his toy while others struggle because of his debts.
A few times [paying out of your own pocket], maybe, but make sure you get reimbursed straight away. If it happens again, tell them the boat doesn't move until everything is current. And stick to it.
Have we ever noticed that the dayworkers who are hastily called to clean the boat and prep it for a boss' trip get paid, but if there is a contractor on the boat the same day, he may have to fight for his bill to be paid?
They believe that only the squeaky wheel should get paid. It may reflect their upbringing. I see only self-made owners doing this. Those who grew up with money seem to pay their bills on time.
When you start on a new boat and you see this happening, it's time to move on cause it's most likely going to keep happening.
We are not here working for rich guys in order to sponsor them. If they have enough money to pay for a $2 million or a $60 million yacht, they can pay. We are just workers in this industry. Does a manager of a hotel pay from his pocket the bills of the hotel? Does the captain of a 747 pay the bills of a jumbo jet from KLM?
Not paying bills makes it hard to get work done if contractors are worried about getting paid. You’ll usually have to use more expensive, larger companies that can take a gamble and can chase after the money, as with a mechanical lean.
I suppose the only way is to keep on top of them. What I have also found is stipulating a date after the end of the month, say the 2nd or 3rd of next month, when things must be paid so he feels he is winning. Bills then seem to be paid more on time. This must, of course, be agreed by the people concerned.
Paying the bill for work that you order -- and mutually agree with the vendor as to its cost -- is a social responsibility. It is also the vendor’s responsibility to provide the service in a timely manner and at the quality and price previously agreed upon, otherwise a new price must be negotiated. In any event, the bills must be paid in a timely manner. Personally, I choose only to work for quality folks who pay their bills. Thank God for the boat’s credit card (a visa with no limit). All my boss has to do is keep that working, and keep me in paychecks for the crew. I'll handle everything else.
When working for a Saudi family, they never gave me the full amount budgeted for. They assume there is 10 percent to 20 percent graft included, so they always gave 10 percent to 20 percent less than the budget asked for. It got so bad I started charging monthly interest on the unpaid amount.
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