When Clients don’t Pay

By , May 24, 2009
It’s a pleasure to be working at a job that you enjoy, right? You studies and practiced and learn through trial and error what works best for keeping track of your projects. And you manage to attract customers, since you’ve done well, the administrative side of things. And best of all, people are referring you to others. Business is GOOD. And then there’s billing. It’s part of the less-than-fun administrative side. And it’s an integral part of becoming affluent, comfortable, or of just staying afloat. You learn how best to bill clients, and what works better for different clients. This is all learned over time. The way you get to this comfortable place is to have a working formula. It’s good to have plans from the beginning, on how to bill, how to collect and what you might do when clients don’t pay.

Plans for Getting Paid

Know Your Rates

Even if you don’t post them for whatever reason, know how much you charge. What you charge may change with the cost of living, but it’s much more professional to have your rates easily available to share with potential clients. Also since it’s possible that rates may change, state that. It’s something that most people know. But keeping clients abreast of rates and changes is just good business. While we’re discussing this, it’s a good idea to post your rates. If not, have it online so that you can send it to clients when they request it. You should be able to shoot it to them when you talk, provided you’re at your work computer.

State How You Expect to be Paid

Let your clients know their payment options. Most clients shopping online would like to get the whole picture, or as much as possible. If you don’t have any information stating the details, clients are likely to move on to the next site offering services similar to yours–your competition. A simple statement listing the ways that you accept payment and time frame for clients to pay in will go a long way.

When You Know You’re not being Paid

In spite of all the up front communications, and certainly when it’s not clear, there are those clients who are unwilling to pay. When a  client is unable to pay, you can decide to work out special arrangements with them.

Collection Plans

When a client decides not to pay, there are steps you can take. And you should not hesitate to get started. When it’s clear that your client isn’t going to pay, you need to implement your collections strategy. You may find that some clients just need a reminder. Your plan may vary, but this a formula that you can follow once your payment is not received:
  1. Reminder
  2. Second reminder, firmer text
  3. Give notice of taking further action
  4. Take further action
This process should take a minimum of 2 weeks to go through. The first thing, the reminder, should be sent when your payment isn’t received according to the arranged date. When you have a clear payment expectation, then you take the guess work out of knowing when to proceed with this collection process. You don’t want to have to go through this at all. But if you have to, it’s best to have no gray areas in your expectations of payment.

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