There's nothing more frustrating than when you show up for a job, keep up your end of the contract, and then have to endlessly pursue a customer to pay what you're owed. Don't think that it's necessarily your fault if this has happened to you more than once. You can do everything right from start to finish and still wind up with collection problems.
Is it possible to avoid it? Perhaps, but there are so many variables at play that it's impossible to find and implement a foolproof formula. So how do you deal with it when it happens? We have a few safeguards you can put in place, as well as some suggestions that could help you when you have to chase a customer to get your due.
Know Your Client
There are numerous ways that you can get information on potential clients, especially in the Information Age. Numerous agencies and services will help you with background checks, and there are other avenues as well. Do a little digging and you can find others who have worked with this client. Ask outright what it was like working with the customer. If the horror stories ensue right away, don't take the job.
Always Have a Contract
This may seem like a no-brainer, but it goes way beyond just a standard written contract agreement. Many times, customers will decide they want to make changes after the work has begun or they want to add more work to the existing order. When that happens, you must revise your contract before commencing any additional work or making costly changes.
There are useful contract management solutions out there that can make this process much easier, so don't skip this step. It's one of the biggest obstacles to getting paid if you neglect it.
Outline a Payment Schedule
Part of your contract should include a payment schedule at specific intervals in the project. Pay schedules are a great way to make sure that the necessary cash flow to continue the work is always there. If the customer misses a payment date, make it clear that there is a specified grace period, after which time work will cease until the balance due is paid in full. Remember, you need to say what you mean, mean what you say, and do exactly what you say you're going to do every single time.
Keep the Atmosphere Friendly
If you come on too strong, the customer can use this as an excuse to not work with you. Remember that you need to protect your own reputation and be the one who exercises professionalism.
Don't be afraid to negotiate with your customer and see if you can come up with a payment agreement that is in everybody's best interest. Understand that whether it's fair or not, chances are that you will have to be the one who exercises flexibility in these cases and, no, it's never convenient.
Stop the Work
Once all attempts to get payment have been exhausted, it's time to do something that will get the customer's attention. Stop all work and let the customer know that the job will be on hold until the account is current. Again, you will need to figure out how to do this in a friendly and professional way. Give the customer every chance to make it right and assure him or her that there will be no further delays as soon as everyone is back on the same page.
Follow up Regularly
Expect some resentment on the part of the customer even if you do everything right. Be persistent but maintain an amicable tone at all times. The more tension you create, the less likely it will be that the customer will want to fix the situation. Kill the customer with kindness, and it becomes more uncomfortable not to work with you.
Get Some Help
If your efforts really aren't getting you anywhere, you might want to have your attorney get involved. He or she might refer you to a collections agency whose legal department will draft a letter seeking payment. If by some chance, you don't have an attorney on retainer, numerous online collections companies can assist you.
Take the Customer to Court
If all else fails, you might need to sue the customer to recover the money you are owed. The best way to simplify this process is to maintain a payment schedule in amounts that fall within the state maximum for small claims. Suing in small claims court is easier and faster than going after larger amounts of money, so keep that in mind as you are writing up your contract.