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This is one of the hardest parts of the business, I think. And only recently
have I had problems in this area. When you put yourself and your company
resources into completing work for a client and then that client decides not to
pay, you find yourself having to justify your work -- not to your client, but to
yourself.
Most companies take cash, check, and major credit cards, and many companies
require payment on delivery (COD). Offering terms is tough, though because
you need to know you can afford to wait at least 30 days to be paid. Actually,
by the time the client gets the bill, it's processed through their accounts
payable department, the check is cut, signed, and mailed, it could be
45-60 days. Depending upon your cash flow, this waiting period may not be
possible. For many clients, requiring COD is no problem. But what about the
government agencies who have their own accounts payable policy or larger
companies who have an accounts payable department and set their "own"
terms of payment?
When you quote a project, put the payment terms in the quotation. If you
get the job, they know what your terms are. If you want more immediate
payment, offer a discount for payment within 10 or 15 days. For example,
offering a 2% discount if the client pays in 10 calendar days may prompt
quick payment. Charge late fees or interest on late payments (check with
Truth in Lending laws on this) and make sure you publish your terms on all
of your invoices and statements. If you set a policy, for example, that on
every project priced at $500 or more a 50% deposit is required, at least
you'll get half your money up front. This works very well with clients who
have already worked with you and trust you. New clients may not be willing
to put money on the line without seeing the product, but requiring only half
up front is acknowledging this and they may be more accepting.
If you offer terms and the due date has come and no check or payment has
hit your desk, call the client to tell them you're concerned that their payment
got lost in the mail or maybe your bill got lost (we always put the invoice with
the delivered project, if I've given them terms--if they received the work,
they received the bill). When you make your day-after-delivery follow-up
call to check on their satisfaction with the project, ask if they have any
questions about the invoice. They may not have noticed it or may have
forgotten to send it to the A/P (Accounts Payable) department. This will
serve as a gentle reminder rather than an urge to get immediate payment.
Don't let an account get old. The older it gets, the harder it is to collect.
To make sure you always have the correct address for a client, send regular
or occasional mailings. If the address changes, the mail will be returned.
That's a clue to call them and verify any address or phone changes,
particularly if the bills go to an address different from the project delivery
address.
Don't be shy about asking to be paid for the work you do. It's your money.
It's your time, and you were there for your client when he/she needed you.
No one expects a service free. If you start getting late payments from your
client or any other clients, immediately stop giving terms until you get a handle
on your receivables.
Expect payment for your work. It's your money!
Bob Brolhorst
Wave 5 Marketing
http://www.wave5marketing.com
bbrolhorst@wave5marketing.com
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