As a freelancer, entrepreneur, or small business owner, getting paid can be the hardest part of doing business. But it definitely shouldn’t be. After all, you’ve done the work in good faith. Now you just want your money in a timely manner.
When times are tough or just uncertain, it can get even more frustrating. Here are some tips and tricks for dealing with clients and customers who just won’t cough up the dough.
1. Put It In Writing
Make sure you have a written policy about when you’re expecting payment and any payment plans you may offer, and make sure your client has a copy of it. Len Sklar, a debt collection consultant in San Carlos, Calif., can’t believe how many small businesses don’t use this simple procedure to keep expectations clear. As he points out, if you don’t have a payment policy, the customer will have one — and you probably won’t like it.
2. Run a Check
Before you sign on a big customer, it might be worth it to run a credit check first. Dun & Bradstreet maintains one of the biggest databases of businesses’ credit reports, which you can use to decide whether a customer might be trustworthy or not.
3. Don’t Be Billing Old School
Getting and sending that bill at the end of the month made sense when it took a few weeks for a letter sent from New York to make it to California. You’ve heard of the Internet? eCommerce technologies like PayPal and QuickBookshave made paper checks old news, so now even small businesses can afford to accept credit card payments online and invoice everything in real time.
4. Call Early and Often
Unfortunately, late payments don’t collect interest, so waiting and waiting won’t get you any cash. Call them up early and often. Be persistent and serious, but don’t be rude. Don’t be afraid to show a little muscle by asking for a specific deadline by when you will be paid. If that comes and goes and still no money, that’s when you can bring out the big guns. As Sklar points out, you want to either get your money or get the fact that it’s gone so you can stop wasting your time.
This tips slide show from Business Insider on how to handle late paying customers offers some good advice on how to feel more confident and less awkward when talking customers.
5. Watch out for Irregular Behavior
If a long-time customer who usually pays in 45 days all of a sudden is paying in 60 days, they’re probably having cash flow issues. If it’s a customer or company you know well, approach them sincerely and ask about their situation.
6. Beware The Hotshots and The Big Bozos
Lisa Bergson, president and CEO of MEECO and Tiger Optics, tells it like it is when it comes to getting paid and taking names. Bergson is particularly apt in noting how big corporations engender a “culture of evasion and obfuscation,” hiding their accounts-payable department behind a “nearly impenetrable veil of voicemail.”
While Sklar admits that some big corporations do understand small businesses’ concerns and pay them faster, Gene Fairbrother, president of business consulting firm MBA Consulting, isn’t as forgiving. He suggests instead to never let your business become so dependent on one customer. When you reach that point, you’ve got bigger problems than whether they’ll pay or not.
7. Haul ‘Em Downtown
Going to small claims court, or hiring a lawyer or collection agency could be a huge mess, but it could also pay off. Small claims court tend to have very inexpensive filing fees, and usually are a pretty good bet according to Sklar. Collection agencies can be pricier and often take a cut of whatever they manage to finagle out of your deadbeat customer. Before taking any legal action, make sure you know what you’re getting into.
Trickster customers have always been around and will continue to infuriate honest entrepreneurs and freelancers everywhere. Some people, like Robert Bodi and his daughter Ashley, have had enough.
Together they started Business Beware, an online portal where contractors can vent their frustration and warn others about terrible or impossible to please customers.
For the betterment of fellow workers, the Bodi’s website has become an anti-Better Business Bureau for small business owners who want to stay away from the deadbeats.
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