As a small business owner a major concern is getting paid.
Cash flow is important to a business. As a business owner, knowing that you are getting paid properly for what you do will allow you to do your best work. It will allow you to truly focus on your client and not have to worry about whether you will get paid for your efforts.
So, how can you make sure you will always be paid?
First, you need to pick the right client. Consider these ideas:
Does this person fit your avatar or A+ client description?
Can you help this person?
These are important considerations because if the person is not your ideal client and you cannot help them, it becomes more likely that they will not pay you.
Second, once you have the ideal client, the best method is always to ensure payment prior to commencing any work with the client. Set up a policy and a procedure to standardize this. I know it is hard, you just want to do what you love and help others, but getting paid is part of business. The right client will appreciate and respect a formal request for payment. .
Depending on your program or service, your method might require full payment or just a deposit prior to commencing any work. In either case, I insist you enter into a contract or client service agreement. Define the scope of the work and who is going to do what, by when, and for how much.
What about clients that renege on a contract or do not live up to their obligations? A proper contract will prevent any confusion or miscommunications in these situations. There should always be a written contract that it is properly drafted to lock the client into the agreement and the stipulated payments. Don’t be afraid of contracts, they are a simple way to objectively measure your and your client’s obligations to one another and keep both parties honest.
If there does arise a situation in which a client is not living up to their end of the contract, the first step is to be a good person. Ask the client if everything is alright. Keep in mind this is a person and a client. Is there some personal circumstance or family emergency? Show compassion and understanding, first because you want to and are a good person, and second because it helps in getting what you need. It goes a long way.
Once you verify that everything is alright on a personal level, it may be time to get more formal with your demands:
– Have an attorney send a demand letter for payment. Maybe a payment plan can be worked out;
– Hire a collection agency to make calls and send letters. Collection agencies will generally pay you 50% of what they collect. If you need more information on collection services, be sure to visit the Commercial Collection Agency Association’s website:
– Offer a discounted payment as a one-time offer. Put this offer in writing and put a strict deadline on it. Be extremely clear with the client that this offer is only happening once. If they accept, be sure to formalize the deal with a legal agreement called a “mutual release and settlement.”
If the above efforts fail, you will then have to decide whether pursuing the amount of money and dealing with the client is actually worth more of your time, money, and effort to commence a lawsuit.
With your business, choosing which clients you will work with is your decision. If you get the feeling that a potential client does not fit into your A+ client profile, then maybe require more payment up front, put stricter requirements on payment, or in some cases make the decision not to work with this client.
So, you have three important techniques to implement that will help build a strong foundation for your small business:· choose the right client (i.e. one you can help; one who pays);
· get paid before commencing work; and
· work with contracts and formal agreements.
If this has raised some red flags, let’s jump on the phone and see where you are at in your business. Contact my office to schedule an appointment.
On the next video, I’ll give you tips on how to avoid having to rebrand your business or programs. See you there.
If you have questions about your brand or logo contact the Law Office of Jason H. Rosenblum, PLLC today at Contact Us to discuss the details first.
DISCLAIMER: The information contained in this article is for informational purposes only and is not legal advice or a substitute for obtaining legal advice from an attorney.
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