Ways to get paid more quickly…
One of the most devastating reasons why businesses fail is because they run out of cash. Why so devastating? Because quite often those businesses are profitable and delivering great products.
So scroll below to see my top ten for getting paid.
But first I want to tell you a story.
Recently I met a fellow dog walker and we got talking. And she told me a very sorry tale indeed.
Her husband ran quite a successful print and design business. But a few years ago he went out of business when a friend (yes, a friend) refused to pay for a huge stationery order.
Apparently, the friend said his 3 year old could have designed better stationery. The fact that he’d approved the design, was happy to use the stationery in his business and had the logo on his van was irrelevant. The case went to court. And the dog walker’s husband won. But the damage was done. The business had gone under and a ‘friend’ was lost (although I questioned her definition of ‘friend’).
Her husband’s gone back to working for someone else for peanuts. He didn’t have the stomach for this sort of upset.
But it could have easily been avoided.
Well, in this case I’d have charged a significant proportion (75% or more) before the job ever went to print (and probably 25% before starting the design – refundable if we couldn’t come up with a design they liked).
By the way, I mention getting paid up front to all my clients all the time – it’s one of the easiest way to ensure payment.
And I’d have asked the customer to sign a legal document to say they were happy with the design and accepted that they took responsibility for the print. Worried about insulting a ‘friend’? Just tell them that’s the way we do things here. If they don’t like it, they can’t work with us.
Would it have got the whole job paid for? Possibly not. But it’s better to chase for 25% than 100%. Actually, if it was a big enough job I wouldn’t have given them the stationery until they’d paid – I’d have let them look at a sample and then asked for payment. If they wouldn’t pay, at least they wouldn’t have the stationery and design to use.
Would they have asked for their money back after the job was printed, they’d paid and taken deliver? Possibly, But they’d have had no legal case and probably wouldn’t have taken legal action to recover any money paid.
So what other ways do you have for making sure money earned ends up in your bank account and not your customers?
Well, here’s my top 10:
- Payment up front (really, it’s the easiest way).
- Can’t go for number 1? Then staggered payment terms – some before, some after.
- Invoicing straight away – don’t leave it until the end of the month.
- Finding out your customer’s payment runs – and making sure your invoice hits their desk in time.
- Chase outstanding invoices – use humour or blame it on the accountant – but make sure you chase.
- Reducing your payment terms – 60 days to 45, 30 days to 15 etc.
- Make good friends with whoever’s paying your invoice – which quite often won’t be the person who’s ordered your services.
- Use the phone – a phone call is harder for your customer to ignore than a letter or email.
- Get someone else to chase – it can be easier for someone else to chase on your behalf as they don’t have the relationship. Either an employee or a friend can go in more hard ball than you can.
- If all else fails, don’t be afraid to threaten legal action – a solicitor’s letter can quite often get a payment where you can’t – and follow through if need be.
Worried about losing a customer? By the time you get to number 10 you’ll hope to never see them again!
And don’t be fooled. The customer who drags their heels on paying, not only costs you time and effort (which takes your focus away from the real business) they also cost you money.