Friday, 26 June 2015

The Work From Home Series- Getting Paid!

I haven't done a 'Work From Home" post for a while and though one is overdue.

Today I am going to discuss what might be the most crucial part of running any business, whether from home or anywhere else- actually getting your clients to pay you. After all your blood, sweat and tears in starting up a business, you do actually want to be paid for your work. 

If you do the work, obviously you will get paid for it, right? Wrong. Bad debt is one of the factors that is most likely to sink a small business. If your business is new, you might be slightly lenient with credit terms, hoping that this will help you build goodwill with clients. Unfortunately, when it comes to paying up, there are too many out there that are inclined to take advantage and this is one area that you can't afford to always play the nice guy- like that (slightly annoying) LunchMoney Lewis song goes... I've got bills I've got to pay... I've got mouths I've got to feed.

Here are some suggestions for making sure that you get your money in when you need it:

FROM THE WORD GO

The best way to ensure that you get paid is to make sure that expectations in terms of payment are made clear from the very beginning to avoid misunderstandings later on.
  • Make sure you keep careful accounting records and that clients are invoiced straight away.
  • Make sure that you are clear about any terms of supply of credit.
  •  Do a credit check before providing credit to anyone- or at the very least for any big deals. 
  • You can consider investing in debt collecting software.
WHEN A CLIENT FAILS TO PAY

You may have sneaky clients who try to withhold paying bills as long as they can so that they can benefit from interest derived. Perhaps they simply forgot to pay, payment was overlooked or there is some minor problem that can quickly be ironed over. Here are some steps that you can take while there is still room for giving your client the benefit of the doubt:
  • You may want to start by sending a friendly e-mail reminding them that that payment is still outstanding and reattach your invoice and banking details for ease of reference.
  • If they still don't pay, you may want to give them a phone call or even a visit for large sums outstanding. At my first job after university, we had a lot of bad debtors (which happened to be large corporate clients with plenty of money). My boss used to have me physically drive over to the clients for a courtesy visit, engage in chit chat, hand over some promotional material and then slip in a pile of invoices before leaving- sneaky but effective.
  • If a client admits to having trouble paying due to financial reasons, you may want to work with the customer to come up with a mutually agreed payment plan- rather that than not getting paid at all!
TIME TO GET NASTY
  • If the above does not work, you may need to hand the client over to a debt collection agency or an attorney. 
  • In a worst case scenario, you may need to litigate to  get your money in. This will destroy any relationship with the client, but at this point they are obviously not the type of client that you want anyway. However, this should be a last case scenario as it can be time consuming and you will incur legal costs along the way.