Everybody who’s running a financial side of the business disregarding of its size have met with a clients that do not pay on time or do not pay at all. Assuming that product or service were delivered in time and quality, there is no excuse for any client to avoid it’s obligation. Cash-flow is the most important thing as you have to keep people working for you on their payroll, you have to pay bills or you and the organisation you are running might be going towards bankruptcy.
Once in a while you will be in the position of chasing payments, and this is not something that anyone will envy you on. You won’t feel nice about it, but there should be no feelings when it comes to business. The only way of handling these situations is with hard attitude of “F*ck you. Pay me.” If you haven’t seen Mike Monteiro’s video on this subject, I suggest you do.
The first thing you should do before even getting into any form of cooperation with your client is having a clearly defined payment conditions. There is no excuse for not making an agreement on this with your prospective client.
Chasing payments can be very stressful and for sure is time consuming. Have your conditions of cooperation in place when making a deal and it will help you later on.
Assuming that you have clearly defined these conditions, the first thing you should do is avoid being late, but also strategically sending the invoice. When sending an invoice make sure it is not the end of the week and don’t send it at the end of working hours. Your invoice might end up being put away and forgotten about. Read about when is the right time to send invoice.
Once you notice that payment is late be proactive. Contact the client immediately. Send them a polite email asking if there was an issue with a payment, invoice or in a bank. These things can happen so avoid accusations in this first email. Usually, you will be paid immediately.
If the payment has not been made, be persistent. Call your client in shorter intervals until you get paid. If they tell you that the payment has been made, allow them two-three business days to verify the payment. If they still haven’t paid, start calling them again.
In case that payment still hasn’t been made. Accept the inevitable. You will have to discontinue your service and focus on other – paying clients. Before you do so, inform your client that you have no other choice. If you don’t do it, you will soon find yourself in a vortex of despair.
Finally, if possible (and the best is if you have a written agreement with your client), inform your client that they will be hearing from your lawyer. Then, let your lawyer handle the process for you.
These steps will most definitely help you keep your business profitable and relationships with your clients in best order. But don’t forget – you should have a process and set of rules in place to which your client should agree, and you should have a contract in place. Without it, your non-paying customers will be able to wonder and you will be left with empty pockets.
Although I have written the things you should do, I wanted to keep you informed of the things you shouldn’t do as well. These things are important to avoid to keep your status and relationship with a client professional:
- Don’t write emotional emails. These will just lower your position and negotiation power.
- Follow through on promises. It’s the only honorable and morally. But do not to promise more than you can do. Do not go overboard with threats either. Threats are also promises, and it is unfortunate when such promises are not met.
- Do not install a kill switch. It is immoral thing to do which may end the relationship with your client and probably won’t resolve the payment issue.
To sum it up, be moral, professional and strict. Don’t be afraid of asking for what you agreed on in case you have delivered. Nobody likes failing the agreement and loosing a partner so keep it in mind when talking to your clients.