Late payers can be a significant drain on a small business’s finances. No one likes to think that their clients will fail to deliver on their end of the bargain when they agree to work. However, their financial issues become your economic issues. Unfortunately, this happens too frequently. In many cases, it isn’t so much a case of the client not wanting to pay; although this happens, it is usually the result of financial issues.
Experts like Jefferson Capital Systems know all about this. So how can you avoid the possibility of not being paid for your work?
So how can you avoid the possibility of not being paid for your work?
Check out your client
Before you even enter into negotiations, do some background research first on your potential client. Ask your peers and associates if they have had any dealings with this company and know of their reputation. If your digging comes back positive, you can go ahead; if not, you can decide whether or not you want to take the risk of potentially not being paid.
Draw Up A Contract
A contract is a legally binding document. Has it been created with a legal expert in your field so you can fall back on it if anything happens? Include the deliverable from all parties, timescales, resolution processes in the event of problems, and payment requirements.
Have it signed and give everyone a copy, so both you and the client are aware of your responsibilities.
Consider Retaining Legal Services
No one wants to pursue legal action against non-payers, but in some cases, it is necessary. Choose representatives who have knowledge and experience in your industry, such as cannabiz, who are experts in recovering debts owed in the cannabis industry.
Ask for Payment Upfront
Where at all possible, treat the work you agree to as a retail sale and request payment upfront. Usually, 30-day invoices terms are standard, but removing this clause from the table and insisting on full or partial payment upfront can help you to avoid the possibility of not being paid. Do not start any work until the required payments have been received, and you are happy to go ahead. This won’t work for all businesses and nor will all clients be on board with this, but those who are unable to take the financial hit of not being paid, or the invoice is of a substantial amount, can be an alternative to the worry you might have about losing out.
Keep The Lines of Communication Open
This applies to before, during, and after the work has been completed. The more frequently you are in contact with the client, the less likely they will disappear. Make sure you have multiple contact avenues if you need to chase payments or discuss the work you are undertaking. Think emails, phone numbers, work, business addresses, LinkedIn profiles, social media, etc. This will allow you to retain lines of communication in the event of a relationship breakdown. Knowing who you can turn to in advance can be a weight off your mind should you need to pursue legal debt collection.
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