Finishing up a big client project can feel like such a victory! You did the work, you’re proud of what you accomplished and you have a happy client to show for it. Then …. Nothing. We’re talking crickets. Don’t they know that you want to be paid for all of your hard work? What do you do when your client just doesn’t pay?
As Benjamin Franklin famously stated, “An ounce of prevention is worth a pound of cure.” As a service provider, that saying should be written on your walls! Protect yourself before the project even begins by doing a little research on your potential client. Find out how they have treated other service providers in the past for some insight on how you can expect to be treated. Make sure you have a contract in place and don’t be afraid to negotiate better payment terms or stronger intellectual property rights than what they initially offer. Stand up for what’s important to you while they are still excited to start your project!
Even when you have all the pieces of a solid project in place — a strong contract that protects your rights, a clear scope of work and straight-forward deliverables, even a happy client — it is possible that you will encounter problems collecting payments. A lot of people jump to the conclusion that you will have to hire an attorney to sue for your fees, go to Small Claims court or hire an expensive debt collector. These are not your only options and they certainly shouldn’t be your first!
My years of experience handling the bookkeeping for small business owners have taught me that collecting your fees can be as easy as following the four strategies below:
- Pick up the phone. I’m going to go out on a limb and assume that you’ve actually sent your client an invoice. You know you sent it, but do you know if your client received it? Are you sure? The first step is simply to pick up the phone and ask. Ask your client if they received your invoice and approved it for payment. If they never received it, then stop what you’re doing and send them a copy! If they have received it and haven’t approved it, ask why not and what you can do to speed up the approval process. Lastly, if they have approved it and passed it along to someone else to issue payment, ask for their help in tracking down that check. I can’t tell you how many times a couple quick phone calls have found invoices in spam folders, mislaid in inboxes or simply lost in the shuffle of day-to-day business. A phone call may be all you need to get your payment back on track. Not another email, not another statement, but a simple person-to-person phone call that reminds everyone that you’re small business owner who likes to put food on the table!
- Be persistent. Once you’ve established that your client does have your invoice and your work has been approved, then it’s time to ramp up the friendly-yet-persistent routine. Don’t let weeks go by without your client hearing from you. I suggest weekly contact to remind your client about the outstanding balance supplemented by printed statements in the mail. Be prepared to share the love by sending those same statements to anyone else who may have influence over the situation, such as your client’s bookkeeper or supervisor. Your goal is to be just annoying enough for them to want to pay you without being so annoying that they don’t want to hire you again!
- Offer payment options. Sometimes your client wants to pay you but just doesn’t have the cash to do so. If that’s the case, be willing to offer payment terms. I had a client who was just about to write off a $40,000 invoice as uncollectible after months and months of trying to collect her fee. Imagine her surprise when her end client jumped at the chance to pay the bill in four $10,000 installments over five months. Simply spreading out the payments allowed her client to honor their agreement and she was able to collect her fee without the help of an expensive attorney or debt collection service.
- Be prepared to negotiate. If your client has your invoice, knows that you want to be paid and even has the money to pay you, the problem may be more than a payment problem. Circle back and ask your client if they are happy with your work. If not, be willing to enhance your deliverable, knock a bit off your fee or provide a bit more support. A little give-and-take may be all that’s needed to turn a disgruntled client into a raving fan.
Running a small business is hard and tracking down your money can be frustrating. Contact us today if you’d like the help of a professional bookkeeper in your business!
Have any questions about collecting your fees? Please share them in the comments below!