A yacht manager recently complained to us that too many invoices from yachting vendors were slim on details, making it more challenging to get his budget and accounts paid in a timely way.
We wondered if captains had a similar challenge, so we asked. Turns out, not so much.
The results from this month’s survey about invoices will be the basis of a session hosted by The Triton at the second annual U.S. Superyacht Summit, designed to share captains’ expectations with some of the industry’s business leaders.
We purposely left out discussion of the costs and value yacht businesses provide and focused solely on the paperwork that is provided after a job, or portion of a job, is complete. Allowing for the variances that arise depending on the complexity of the job, most captains fall in the middle on the level of details required and desired on invoices. And they are the ones who decide.
More than 70 captains took our survey this month, most of whom run vessels smaller than 140 feet.
We got right to it by asking about details: How detailed do you require an invoice?
The largest group — more than 70 percent — chose the middle option of “pretty detailed.” By that, we mean the basics of contact info, date, and how much it cost, plus a description of what was done and how the vendor arrived at the final charge. For this level of detail, we also expect that the cost of parts and materials would be separated out from the cost of labor.
“Large yachts have budgets that are larger than many small businesses and good records are important,” said the captain of a yacht 100-120 feet in yachting more than 30 years. “We often use past invoices for budgeting and maintenance planning.”
The bulk of the rest of our respondents — 19 percent — said they require even more details, including part numbers, number of workers who did the job, breakdown of time for each, rate per hour for each including travel rate vs. labor rate, etc.
Just 10 percent of captains said they only required a basic level of details such as contact information, date, work and cost.
In addition to asking what they require in an invoice, we also wondered what their ideal invoice would include, to see if they wanted more than they needed.
They don’t. Again, most captains (though slightly fewer) said the middle level of details was sufficient.
“There can be too much info for estimates or invoices when they are passed up to accounting for payment,” said the captain of a yacht 80-100 feet in yachting more than 20 years. “It’s better to have details of what was done and how much, but not many details and nautical terms that confuse the lay person.”
In this ideal world, nearly twice as many captains said they wanted all the details they could get.
“Owners of yachts require the same details as they do for their businesses, otherwise they would not be able to enjoy their toys,” said the captain of a yacht 120-140 feet in yachting more than 30 years. “Basically, the more information regarding repairs, etc., to their vessel, the more they like it, and the captain can better explain the whats and why fors.”
“I like it broken down by line item,” said the captain of a yacht 80-100 feet in yachting more than 30 years. “Say it’s install davit. I want labor, parts, materials all under that line item. Then install cleat. I want labor, parts, materials including shop materials spelled out, not shop materials all lumped together. I also want a weekly pre-bill. I like to follow my billing weekly, not after four weeks trying to remember what happened three weeks ago.”
“They are getting paid to deal with the details, so finish the job by filling in plenty of detail about what you did for the money we give you,” said the captain of a yacht 200-220 feet in yachting more than 10 years.
That left just 7 percent of captains who are fine with just the basic level of details.
“If it was me, I don’t care; I know what went on and if the invoice is correct when it’s handed to me,” said the captain of a yacht 100-120 feet in yachting more than 30 years. This captain requires pretty detailed invoices but would settle for just the basics. “I require whatever the owner’s program requires I give them, simple as that. Normally, I have kept them apprised along the way. I have a couple of long-term clients who just want to see the boat and the Visa statement at the house at the end of the month and don’t care for a receipt. They trust me to look out for them.”
“In the end the job costs what it costs,” said the captain of a yacht 100-120 feet in yachting more than 20 years. “I do my best to keep the costs down and I think we do better than most. But if I have to take time to document the costs down to the penny then that is time taken away from my other duties. Since my main duty after captain and engineering is cost control, it seems best to keep me in the field controlling those costs.”
We were curious to learn if these levels of details are driven more by the owner (or perhaps the manager) so we asked Who decides how detailed the invoices need to be?
Three-quarters of our respondents said they, the captain, make this call.
“Many vendors and captains are very flip about the way they contract work; this is the root of this issue,” said the captain of a yacht 100-120 feet in yachting more than 20 years. “In the World of Yachting, contracts occur all the time based on verbal commitments of round numbers … “yeah, we’ll paint that for $20K”. We often see invoices with zero detail at all, from new vendors. (We have trained our other vendors to be accurate or they will be replaced.) It defies logic that anyone would agree to pay anything without a detailed breakdown.”
To get a sense of how prevalent weak invoices are, we asked Have you ever sent an invoice back for more information?
More than half said they return invoices occasionally, but the next largest group said rarely.
“The more time a vendor spends on a detailed invoice, the fewer (if any) questions need to be asked, the faster they get paid,” said the captain of a yacht 80-100 feet in yachting more than 10 years. “Sloppy invoices mean more time to check out what was done, parts, travel, etc.”
About 20 percent said they return invoices all the time for more details.
“I constantly have to tell companies how to invoice,” said the captain of a yacht larger than 220 feet in yachting more than 30 years. “Nothing to do with their estimates, they just don’t seem to know how to simply lay out material cost, labor cost and total. The reason I need invoices is to send to the owner’s office. He is in the construction business and expects invoices clear, precise and with bank and mailing details. Most yacht support trade companies are almost incompetent in this department, especially mechanical types.”
So when invoices are incomplete, What one important thing do invoices sometimes lack?
More than half our respondents noted that a breakdown of hours was the most common thing missing on invoices. Fourteen percent more said a breakdown of parts. About 12 percent said invoices lacked critical details on how to pay or where to wire payment.
“Sometimes all of the above,” said the captain of a yacht 80-100 feet in yachting more than 10 years. “It is always helpful on larger amounts to have wiring info and I typically have to ask for that. Also, if it is paid via credit card, some vendors add the surcharge and subsequently the invoice and actual amount paid do not match.”
“I find invoices are not detailed enough,” said the captain of a yacht 80-100 feet in yachting more than 20 years. “Owners find comfort in being able to see hard evidence in writing of the details of work that people are doing. I takes a lot of time but, as a result, I’ve never been questioned about crew/labor costs.”
“Strangely enough, some of the smaller (often one-man) companies don’t have letterhead,” said the captain of a yacht 160-180 feet in yachting more than 20 years. “It’s not that hard to do on a computer. Put your name, address and phone number on the top of the page.”
One thing that got our yacht manager upset as he went through his paperwork was the handwritten invoice, which he cast out of hand as unprofessional. We wondered if captains felt the same, so we asked How common are handwritten invoices?
Not very, according to 86 percent of our responding captains. And if they do get them, most captains said it’s OK. Just 2 percent of respondents said they get handwritten invoices all the time and they send them back for more professional ones.
“You do find that the contractor that provides a verbal or handwritten quote usually is the one with the inadequate invoice,” said a captain in yachting more than 10 years. “I don’t generally go with these contractors as I expect their work and warranty followup to be of the same standard. Comes back to professionalism, which falls down sometimes in our industry.”
That got us thinking about relationships. Maybe those handwritten invoices are acceptable because the vendor is acceptable. So we asked Does your relationship with the vendor influence the kind of invoice you need or get?
Seventy percent said it does. Most of those captains said their tried-and-true contractors know what level of detail they need so it’s rarely an issue. The rest said they just don’t need as high a level of detail from contractors they know and trust.
“I use contractors I have used for more than 10 years,” said the captain of a yacht 120-140 feet in yachting more than 10 years. “This make life much easier and saves the yacht large sums of money.”
The rest — 30 percent of respondents — said their relationships don’t matter. The boss needs the same level of information from everyone, every time.
Do you require invoices from dayworkers and casual labor?
Most, 61 percent, do not. But still, about 40 percent do.
“Inadequate invoicing is sometimes a problem, particularly from dayworkers,” said the mate of a yacht less than 80 feet who handles the invoicing for the captain. “They often don’t even offer an invoice so we have to ask them for one and what I usually get is a handwritten note.”
Aside from the level of details, one of the main concerns about invoices is timing, so we asked When do you prefer to receive invoices?
Almost half of our responding captains said they prefer to have invoices handed to them at the end of the job, or portion of job that was agreed to.
“Sometimes, they have to mail the invoice because we move a lot; sometimes they say the invoice will be delivered in a few days, which means we are in a different port by then or even a different country, so an immediate invoice would be the trick,” said the captain of a yacht 100-120 feet in yachting more than 20 years. “It makes the onboard books easier to handle.”
“Invoices should be timely,” said a chief stew who runs a yacht 100-120 feet with her husband captain. Since it is she who handles the accounts, she completed the survey. “Boats normally have a set date to have accounts for the past month in by (especially when paying by credit card), therefore if you did a job near to that cut-off date, the captain or purser need that invoice before they can file the accounts for that month to prove the spending. Twenty-four hours should be a max after a job is done.”
The next largest group — 37 percent — said they want their invoices within a week.
The bulk of the rest want them within 24 hours.
Just 3 percent would take them as long out as 30 days.
A few captains had “other” thoughts: “Depends on how big the job is,” said the captain of a yacht 120-140 feet in yachting more than 20 years. “Big jobs, every week but not more than two weeks. Smaller jobs that just take time to finish but not lots of time can wait till the end of the job.”
If that timing is the preferred way, what is reality? When do most invoices actually arrive?
The largest group of captains — 45 percent — said invoices come within a week of the job being finished. About a quarter more come within 24 hours.
Although captains said they prefer invoices immediately after the job, only 15 percent said that’s when they actually get them. Eleven percent more come within 30 days.
“Many vendors are untimely with their invoicing, allowing balances to build up over months then delivering an unusually large invoice all at once,” said the captain of a yacht 160-180 feet in yachting more than 20 years. “This can make it difficult as it draws a disproportionate level of attention to what may just be the sum of several months of normal invoicing from a regular supplier. I’d much prefer to have regular 30-day invoicing on time, than be extended unintentional credit from a vendor’s lazy or disorganized accounts receivable department. I have been amazed how prevalent this is, since the vendor doesn’t get paid until they submit an invoice, but it’s out there and more common than I would have thought.”
That thought of periodic billing made us wonder Do you want invoices as you go (say weekly, or monthly for larger jobs) or all at once at the end of a job?
Of course, it depends on the complexity of the job, but in general and when it applies, 63 percent of our respondents said they prefer interim billing.
“I usually use the mark of about $1,000-$1,500 as the base for small vs. large bills,” said the captain of a yacht 80-100 feet in yachting more than 10 years. “I have had some as large as $300,000. As the scale gets larger, so does the info required. Also, so does the desire for partial bills (think paint job). Most vendors then require partial installments.”
We couldn’t ask about invoices and not discuss payment, but in an effort not to sway into budgets, we asked simply How do you prefer to pay an invoice?
Again, it depends on the job, but ideally, the largest group of captain — 46 percent — said they find credit cards to be the most convenient.
“Check and/or credit card,” said the captain of a yacht 80-100 feet in yachting more than 20 years. “You cannot have just one type of payment because few of us captains have a credit card with a 100,000-plus limit.”
Rounding out much of the rest were wire transfers (26 percent) and checks (21 percent).
“Personally, I use wire transfers and/or checks, as it provides a clear picture of where funds are going and provides a traceable history,” said the captain of a yacht 160-180 feet in yachting more than 20 years. “With all the transparency laws being implemented in today’s business, it is important that we keep accurate bookkeeping and trackable invoices.”
Cash was dead last, prefered by just 1 percent of respondents.
“Cash is the worst, yet I have to pay cash all the time,” said the captain of a yacht 100-120 feet in yachting more than 20 years. “Just try and keep track of a few thousand dollars in your pocket when handing it out to day workers, parts guys, lunch, etc. With a credit card, you just swipe and forget. Everything is very well tracked.”
Some vendors pass along the 3 percent credit card fee to those clients who pay that way. We wondered Will you pay the credit card fee?
Surprisingly, nearly two-thirds said they would, most of which said it was OK as long as the company informed them first.
About 37 percent said the credit card fee is the vendor’s cost of doing business and should not be charged to the owner.
We were curious to learn if quotes had any influence on invoices, so we asked Does the quote or pre-work contract double as the invoice?
Most captains — 56 percent — said no, that the estimate is just that, an estimate, and invoices needed to be more exact.
About 23 percent said yes, the quote should serve as the basis for the invoice.
The remaining 21 percent said a quote could also serve as the invoice, as long as it includes a not-to-exceed clause, and notations are made as the job progresses.
Beyond if the quote actually doubles as the invoice, we asked Should it?
Again, most — 58 percent — said no.
But the rest were flipped, with more agreeing that a quote could double as the invoice; doing so weeds out weak quotes and prevents weak invoices.
About 11 percent said quotes should be the invoice as it’s convenient to go through the pricing process once, ahead of time.
“There is a difference between a quote and an estimate,” noted the captain of a yacht 80-100 feet in yachting more than 30 years. “The quote should be the amount you pay unless you agree to extras in writing. An estimate is just that; it’s a guestimate, and the final should not exceed 10 percent of the estimate.”
Do you use invoices/quotes as records?
Almost half do, noting that invoices are the best maintenance log there is. A third more said “sort of”, noting that they input details from an invoice into the log, but the log is more complete. Added together, 82 percent of captains said they rely heavily on invoices as part of their vessel’s records.
Are time-and-material quotes (and their resulting invoices) OK?
More than half said usually T&M quotes and invoices are acceptable.
But more than a quarter said they aren’t really.
“One thing I come up against frequently is T&M quotes vs. complete job quotes,” said a captain in yachting more than 20 years. “T&M quotes are, for any company, a license to steal. It baffles me when I tell a company I need a complete job quote and they look at me like I’m the first to ever ask that of them. I understand that some jobs have to be structured as T&M but 90 percent of what we need from vendors can be quoted as a complete job.”
Seventeen percent agreed strongly that they are OK; no one strongly disagreed.
We wondered if obtaining quotes was always part of the procedure, so we asked <<BOLD>>Do you get three quotes from three different vendors?
Nearly half of our responding captains said usually, that getting quotes helped to keep things competitive, even if they have a favorite vendor.
“What to look for in an invoice that isn’t already there? This is where the three quotes from three different vendors comes in, to keep you on top of the unknowns,” said a captain in yachting more than 20 years. “Typically the unknowns reveal themselves during this process.”
But almost as often — 42 percent — captains said they don’t often get competing quotes because they have trusted vendors they turn to when they need work done on the yacht.
Just 11 percent said the owner demands it.
Interestingly, no captains said they never get competing quotes.
Interestingly, several captains offered some thoughts about invoices, and shone the light on themselves as the responsible party for making this facet of the industry strong.
“In this type of business, where it would be very easy to ‘hang’ oneself by abusing an owner’s trust, we captains should be very willing and able to explain where, how and why we have spent every dollar that crosses our ledger sheets, credit card statements, or petty cash banks,” said the captain of a yacht 160-180 feet in yachting more than 20 years. “In fact, I sometimes wish there were more questions asked, and sometimes when I’ve had to spend more than usual, I will often initiate a discussion with the owner to let him know what’s coming and give him the opportunity to ask questions. Surprises are never good when it comes to someone else’s money.”
And one captain offered this thought to eliminate trouble with invoices:
“In the past year, we have had maybe five contractors on the boat; the rest of the maintenance has been done by crew and dayworkers,” said the captain of a yacht 100-120 feet in yachting more than 20 years. “The owner told me he was paying about double for his previous crew and the boat was not available as much as when the crew does everything. It takes a good engineer and captain but it saves heaps on invoices in the long run.”
Lucy Chabot Reed is editor of The Triton. Comments on this survey are welcome at email@example.com. We conduct our monthly surveys online. All captains and crew members are welcome to participate. If you haven’t been invited to take our surveys and would like to be, e-mail firstname.lastname@example.org to be added.