Archive for December 22nd, 2010

How Do I Get this Client to Pay?

Dear Danielle:

I have a client who is giving me the run-around on several outstanding invoices. He has stalled, “forgotten,” asked for extensions and payment plans, said the bank messed up his check printing… you name it, I’ve gotten the excuse. He finally told me he was going to get all caught up on a certain date and guess what? The date rolled around and no payment! How on earth do I get this client to pay up?!

I could repeat all the usual kinds of recourse I think we all know about by now:  turn it over to collections, file a small claim, etc., etc..

You have every right to be paid for work you were engaged to do and for which the client agreed to pay. If the situation is so egregious that you see fit to pursue that by legal means, by all means do so. It’s a perfectly valid option and nothing wrong with it at all.

At the same time, weigh out what the cost of pursuing that recourse will be to you in terms of time, energy and money. It might not be worth the toll it will take and may cost more to pursue than the amount of the debt. And if the client is broke, well, you know what they say about bleeding turnips and all.

However you pursue this, and whether you ultimately get your money or not, these kind of situations are always an excellent opportunity to examine what we contributed to the situation. Because the answer is that, yes, we most certainly do cause some of our own headaches. We have to recognize that and own it if we’re going to improve and be more successful in the future. With that in mind, here are some thoughts:

1. Always, always, always, always work with a contract. Did I mention “always?” LOL. You perhaps are very aware of this already and may have even had this client sign a contract before working together. As you know, a contract doesn’t guarantee that you will get paid or that people will always be honorable and have the integrity to abide by their agreements. But contracts are legally binding and enforceable agreements. Should it get to that point, they can definitely help you prevail should it become necessary to take things to court. Now, a lot of times, that’s more work, more money and more energy than it’s worth. But that doesn’t mean you forgo using a contract. A contract does a lot more than just formalize your legal agreements. A contract helps clients take you and your business more seriously. It shows that you are a professional and it makes sure everyone is on the same page and knows what is expected from each other. Never cut corners on this, no matter how big or small the project or relationship.

2. If you work on a project basis, get some kind of money upfront. Would a grocery store let you take home groceries and decide whether or not to pay later? Of course not, and neither should you do that with your clients. You’re not a bank. You have your own bills to pay and it’s not your obligation to extend them credit or otherwise subsidize their business. The time, energy and expertise you give to clients are very tangible, valuable resources in your business. Get at least 50% (if not 100%) payment upfront before you start any work. It’s perfectly standard, acceptable, established business practice to do so. Not only does it help clients (again) take your business more seriously, it also shows that they take their own business seriously. If they aren’t willing to have some skin in the game, neither should you. In the event that they don’t pay the remainder, at least you’ve got half your losses covered.

3. Don’t let folks go into debt. You don’t do anyone any favors by allowing them to go into debt to you. That only makes it harder and harder for them to catch up. And you have a responsibility to mitigate your damages. That’s why you see work-stoppage clauses in contracts that tell clients: no pay—no work. Immediately cease any further work (and do not hand over any pending or completed work) until the client pays all outstanding invoices in full and gets his accounts with you in order.

4. Work with clients who can afford you. Clients who aren’t in profitable businesses or industries are going to have more problem payers than in those that are profitable. Make this a standard and part of your ideal client profile:  you can’t afford to work with those who can’t afford you. Work on your pre-qualifying process (not to mention your marketing message) so that you get better and better at attracting your ideal clients to you while weeding out the cheapskates, tire kickers and wheeler-dealers who always want to dicker or argue over your fees.

5. Work with honorable people. The minute you get any inkling that a person is less than ethical or honest, let them go. Heed those red flags. If your gut is telling you a prospective client might be a problem, trust me (and yourself)–they will be. And if you are dealing with someone you know has a history of screwing people over and being shady or dishonest, don’t fool yourself that you are the one person in the world they would never do wrong. A tiger doesn’t change its stripes. There will be a day that they do it to you. It’s just a matter of time.

6. Define your ideal client profile. Write out all the traits and characteristics that make someone an ideal client for you. Make a list of the traits you don’t want as well. This is something you continue to update and get clear about throughout the life of your business. This exercise helps solidify your intentions about who you want to work with and who you don’t. It helps you better recognize your right clients when they show up and politely decline everyone else.

7. Let bad clients go. If a door kept hitting you in the face, you’d eventually learn to stop letting it do that, right? So why would you keep working with clients who are basically doors that keep smacking you upside the head? If that’s what is going on, you have no one but yourself to blame. And I say that not to berate, but to help folks get clear and conscious. No one else is responsible for what happens in our businesses. To think otherwise is to be a victim.  When you accept that, you are empowered to take the steps to rectify things in your business. Bad clients and poorly-fitting clients will hold you back. They drain your energy and professional self-esteem. If you want to get anywhere in your business, you have to lose the dead weight. Your right clients are out there just waiting to work with you and appreciate what you do for them! But you’ll never find them and they’ll never find you if you keep yourself buried in muck of bad clients, bad policies and tolerating bad behavior. You have to let the unideal go so that you have room for ideal to come into your world.

Doing these things will save you a world of hassle, resentment, wasted time and negative energy in the future. Onward and upward!