Casting a shadow
We all know how important it is to have a contract with our customers and clients so that they and we understand what service we are going to provide. Having established what we are doing, part of that contract is specifying how we are going to be paid.
Sometimes we will specify that we will bill the client when we have done whatever we have agreed to do. Sometimes we will arrange to be paid in instalments, either because it will be a significant job or because it will help the client, or is convenient for a client who will need us year on year. Some businesses can ask to be paid up-front.
What we arrange in terms of being paid has to take account of our own needs. We need a proper cash flow to run an efficient business. We need to plan and therefore we need to have a reasonable expectation of when we will be paid, which we have agreed with each client or customer.
So what do we do when our client has not paid us within the agreed time frame? Firstly we shouldn’t do any more work or provide any more goods. Secondly we need to discuss with our client why we have not been paid. Of course occasionally something will have gone wrong with our service, but that should be something we already know. If the first complaint we have is after we ask why we have not been paid, it is very likely that the complaint is spurious and merely an excuse for non-payment. Of course we have to judge each case on its merits.
If the non-paying client is prepared to discuss why they have not paid, most likely because of cash flow difficulties, then depending on our own situation we could discuss easy payment terms. Sometimes clients will avoid taking our telephone calls, letting them go to voice-mail or using a member of staff to say they are not available. They will avoid our texts. They will ignore our letters.
If the non-payer ignores us then we need to take action quickly. It is no good sitting around waiting to be paid. The threat of not being paid casts a shadow over our own business.
We need to threaten court action and be prepared to follow it up. The process is not difficult, nor is it expensive. If we upset the customer, remember that we were unlikely to get any more business out of them anyway, and who wants a bad payer as a customer?
We cannot afford to be squeamish over collecting due payment for valuable work or supplies. We have to manage our debtors. Bad payers and silent non-payers should not be allowed to ruin our business. Do talk to me if you need help in collecting what is due to you.
Many small businesses have issues over bad payers and are not prepared to press the matter for fear of upsetting the “customer”.
My view is if they are not paying, then they are not a customer, they are a parasite! One recent business client of mine came and asked what to do with a non-payer and was surprised when I said put them on stop and tell them why. A valid cheque arrived 3 days later. Some businesses will only pay when threatened, if that is the case, then worrying about upsetting them or delaying the threat is pointless, as it is just part of the game. It’s not personal, it’s business, (but a PITA nervertheless).