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9 Ways to Ensure Your Clients Actually Pay You


Laura

There is nothing more mind-numbingly frustrating than not getting paid what you’re owed. It can be a mistake in payroll or just not getting paid for services rendered. I actually got a direct deposit slip once (right here in Central Indiana) that said “NO PAY DUE,” as well as getting stiffed for a job completed. I’ve been there.

I’ve dabbled in freelance work this year, got incorporated, and am working on a website. I like to gather information by those who have gone before me — pretty quick professional development! — and I asked my self-employed colleagues: “What is the one thing you would change this year to make your business better?” Nearly all of them mentioned cash flow.

Cash Flow Conundrum

The biggest impediment to cash flow is clients not paying in a timely fashion. Some who own small businesses rely on freelancers to complete a job for a client; when the client doesn’t pay, the business owner can’t pay the freelancers. Many of my freelance friends, including quite a few in the creative industry (graphic designers, photographers, videographers, writers) tell me they are spending more and more of their time collecting money. Bigger businesses seem to be using smaller ones as a bank.

Missed Payment
© Flickr User Simon Cunningham

This is probably not what inspired them to start their own business – their love for their craft more than likely did. The problem with creatives in particular is worse now with the advent of content marketing. All of that content that needs to be created means creative people are in demand. Combine with the fact that that freelancing in general is on the rise, and the issue seems to be more prevalent.

Has This Happened to You?

As much as I think public shaming might work, I won’t name names. But here are some things colleagues have shared with me:

  • A graphic designer told me she was in a minor car accident driving to collect a check she knew the client hadn’t ‘put in the mail.’
  • Another told me she feels like a repo dealer.
  • Yet another had a client tell him to collect the money from the advertising vehicle his videos were produced for.
  • A HUGE corporate client still hasn’t paid another colleague — way past 90 days — for payment on photos for an ad campaign.

9 Suggestions to Help Combat This Issue

There are a few things you can do to conquer the often pesky and at times devastating issue of people simply not paying:

  • Try your best to cultivate quality clients. The old 80/20 rule holds true: 80% of your business come from 20% of your customers. You cultivate them by treating this 20% like gold. Put some extra time into a purposeful system of thanking them, and showing them you appreciate their business. This can be as simple as regular notes in the mail. You’ll be top of mind when they need your service again, and they are more apt to refer you. Once a good cultivation system is rolling, you can fire some of the clients who are much too slow in paying.
  • Reach out. Talk to freelancers who have been at it a while. I’m sure they’ve been around the block a few times in this particular area.
  • Talk to your banker. A small business line of credit will help immensely with cash flow, but more importantly they want your business and are happy to advise as well. I’m sure they have a few tricks up their sleeve for collecting money.
  • Use other resources such as SCORE, a partner with the US Small Business Administration. The Indianapolis office of SCORE offers workshops online and in person on a variety of topics, and has dozens of volunteers to help (The don’t go by “Senior Corps of Retired Executives” any longer, but I am putting emphasis on the word ‘retired!’ They have the time and desire to help. My money is on time spent there being worth a few good nuggets of advice.
  • Establish early payment incentives – Explain to your clients that they can get a discount on their total bill if they pay in, say, seven days.
  • Be sure to have a contract that clearly outlines terms of service. It may seem expensive to have a lawyer help, but it’s cheaper than trying to recover money later.
  • Collect a deposit from everyone, and references from new clients. You may feel like you’re implying that you don’t trust a client when you get a deposit. But really, you’re showing them that you are trustworthy.
  • Honesty is the best policy, and the importance of crystal clear communication cannot be overstated.. If a client who has been too slow in paying for past work wished to hire you again, communicate with them: You’d love to consider working with them again, but let them know what a bind they put you in the last time. Give everyone a second chance once you’ve had that conversation. A third chance? Maybe not.
  • A little empathy goes a long way. If they are actually communicating with you, try your best to provide payment options.

Building a business is hard, and people haven’t been paying their bills for centuries. Freelancers and sole proprietors have exceptional challenges, and I’m always in awe at folks who make a go of it. If you’re just thinking of starting a business, develop a strategy of how to manage cash flow before you actually are set up and running. Your success, and growth, will most likely depend on it.

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About the Blogger: Laura Neidig works for the Riley Children's Foundation as Senior Communications Officer. She also serves as Marketing Liaison with the Indianapolis Monumental Marathon and is a 4-time Emmy award winner.

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