How Do I Make Sure I Get Paid?
Wouldn’t it be nice if all your clients paid on time?
Late payment or failure to pay can be one of the major drains on your business and it's not just a financial drain. It consumes time and energy, while fighting for payment can leave you stressed or emotionally drained as well.
Here are some suggestions for making sure you get paid…
Start at the beginning
Late payment often has its roots in what happened at the very beginning of the contract and stems from a failure to agree ground rules or understand how the client is organised.
Don’t work for free. Reduce your fee but don't do free work because it just encourages clients to take advantage or see you as cheap. They may conclude that future payment is not a big issue for you because you can obviously afford to work for free.
Don’t hand over control of reports, documents and resources without agreeing or receiving payment. Only give the client .pdf files until they pay and make clear that you retain copyright.
Use appropriate terms and conditions. You may find ClickDocs useful for this.
Be explicit with your client about their expectations and your understanding of the work. Many payment problems come from a clash between what you understood and what they expected. (Just because they look and sound intelligent won't stop them assuming that you are a super-hero who gets miracles for virtually nothing AND being disappointed that you haven't!)
Understand the process
Know who handles Accounts Payable for the client. Get their name and phone number, make contact with them early on.
Only work against a company purchase order or at the very least a letter/email confirming their request for your services. Be wary of handing over work without this. Aim for getting a deposit, stage payments or some form of early financial commitment from your client. One company calls it a mobilisation fee - when it’s paid we commit the diary time and get mobilised!
Invoice promptly
Do a great job. Provide superb value and service. Make your client look good, then… invoice when the client is bathing in the afterglow of a job well done. Take it with you and present it on the last day.
And remember, with the right relationship you can change the rules - you do not need to wait 30 days just because that's the norm. Consider this, in many retail businesses the norm is payment on delivery or even in advance. Look for flexible ways of getting paid.
Follow up promptly
Have a plan and stick to it. If your terms are 30 days then ring at day 15 to confirm the payment is coming. Chase again at day 31 and so on. Use the money claim service below if you need to.
Use a Letter Before Action
Sometimes known as a last resort letter, this letter spells out what will happen next if they don't pay. Learn more about this and see an example in the money claim service below.
Consider Factoring
You can sell your invoices to 3rd parties who will give you 80-90% of the value straightaway thus freeing up your cash-flow. They will then chase the invoice and give you the balance minus a small fee when they receive payment. Find out more at Business Link or Google “Factoring”.
Beware of the Sharks!
There are loads of companies on the net who are offering debt recovery services - it always comes at a price AND do you really want to trust them with your customer relationships? Remember that most debt problems can be resolved by proper forward thinking, doing a great job and following a process.
Government Help: “Money Claim Online”
Did you know that there is a brilliant online service provided by the Government that enables you to issue a county court claim against a business or individual? You can issue a court claim online. They post a summons to your client the very next day and take a small percentage as a fee. The process is very quick and also has some good advice about recovering money. Look for links to Money Claim Online at HM Courts Service
