Post by Cecile C. Weich on Feb 4, 2015 16:35:37 GMT
Chances are when you start your business you assumed that things were simple. You would do the work you do best, and people would pay you for it. In this entrepreneurial spirit you invested your advertising dollars, networked and let people know that you were good, well priced and available for them.
But few people in business haven't experienced the frustration of sending invoice after invoice for monies owed, only to hear: "It's been a rough week/month/year...", the infamous "the check is in the mail; "I misplaces you bill", or "I'll drop by with a check." add nauseam. The small business, unlike its larger counterpart, cannot afford to sustain a lack of cash flow. How many missed checks does it take before you can't pay the phone bill, the ad bills, or your staff?
How do we ensure that we get paid for our efforts before reaching that point of no return? What do we do when, in spite of all our efforts, someone owes us money? How do we keep it from getting to the point where that check, still in the mail, represents our first quarter profits?
The number one rule of thumb is to get as much money in advance as possible. At least enough to cover the initial thrust of work. But even more important is when you've completed that initial thrust - stop working. Even if the customer assures you that the check is in the mail or they will give it to you the next time they see you, when the money runs out, so should you.
"Often the ones who don't pay are judgement proof", warns Weich. They own nothing in their own name, and they repeatedly enter into Agreements they don't expect to honor.
Weich also advises to have as much as possible in writing. A written contract is a must and should cover all points including how much you are charging and what work is getting done; who pays for expenses including phone calls and correspondence; and whether the customer pays if they challenge the quality of your work.
"Photostat every check that comes in, just in case, " suggests Weich. "In the event that you someday win a judgement against the client, it will help you your income execution".
In addition, Weich tells her clients to ask for bank account numbers and to get authorization from your clients to call their banks for credit information.