As a freelancer or a small business dealing with larger clients, one of the biggest problems in a downturn is not necessarily finding work, but getting paid for it once it is completed. As everyone tries to maintain a healthy cash flow as times get tough, larger companies can drag their feet over raising a cheque for your latest invoice, stretching the payment period to the absolute limit, while you fret and worry that the reason they haven’t paid you is because they might go under at any time.
Of course, it helps if you already have a firm set of terms and conditions. If you demand cash on delivery, don’t make any exceptions, no matter how good a client has previously been. If you state that you expect payment within 28 working days, there’s no point in customers asking you for 30 “just this once.” Your invoice should repeat the terms and conditions that were agreed before you took the work, and if necessary, the absolute deadline for payment can also be included too.
Also, make sure that you invoice accurately and in a timely fashion. Don’t be like me; I’m terrible. I veer between asking for payment immediately and only remembering work I’ve done at year-end. Far better to devise a billing schedule whereby you know when invoices are due to go out, and also when you expect to have them paid. You’re less likely to have to scrabble around for money if you have a clearer idea of your cash flow.
And make it easy for your clients to pay you! It’s amazing how many companies will insist on payment by cheque or banker’s draft only. You should be able to take cheques, direct payment into your bank account, mobile money transfers and cold hard cash. If you have a merchant account, add credit cards to the list. The easier it is to pay you, the fewer excuses a client has for not giving you what they owe.
Finally, if a recalcitrant client is still giving you the runaround, don’t be afraid to chase them. You don’t need to stalk their MD to his house (at least not yet), but stay on them. Start with a polite reminder, follow up with a phone call, and keep pestering them until they pay up. Don’t be afraid to use your terms and conditions as a carrot, or a stick, if you prefer. You can either offer a certain percentage of the value of the invoice off if you receive payment within a certain time, or you can threaten to add a similar percentage to the total if payment is not received within a given period. When chasing up an invoice, remind the client of this, and highlight the damage they could be doing to their own bottom line if they continue to ingore you.
Not all businesses can be checked for creditworthiness before you start working for them, and not all will behave completly honourably in their dealings with you, but by laying out clear terms and conditions before any work is undertaken, you stand a better chance of being paid what you are owed.
[Image by Finizio]