Run Me My Money, Please: How To Get People To Pay You What They Owe When You Run A Business
With so many people struggling to deal with the rising costs of living and the staggering unemployment percentages throughout the nation, many people are thinking more seriously about going into business for themselves. The liberty to do what you please with your own time and the financial freedom that entrepreneurship provides are priceless. However, being a small business owner comes with its own challenges.
I own a small nonprofit consulting business and have a number of friends who have their own entrepreneurial endeavors. There is one frustration that it seems a few of us share. We’ve had clients who just don’t do right when it’s time to pay. Why oh why must we make it hard for the business owner who is trying to establish him or herself, build clientele, and end the year in the black? People rarely go to the register at a department store and negotiate the price of the merchandise they’re purchasing. They pay the price indicated on the tag. People don’t expect to walk out with items and then pay the store when they can; they understand that they are participating in business exchanges and that they must provide payment for a product in order to receive it. Why aren’t these simple concepts understood as readily when doing business with entrepreneurs?
I recall working with a client who I deeply discounted my services for because she started all of our conversations with long stories about how little she could afford, and I really wanted to help. I drafted a contract which she signed, secured the first payment installment and we began our work together. We worked with relatively few problems. That is until the work was complete and it was time for her to settle her account. It was at that point that Miss Lady began a disappearing act as impressive as Franklin of Terry McMillan’s popular novel with the same name. She was dodging phone calls, not responding to emails, the whole nine yards. When I finally caught up with her, she had spectacular stories for days to explain why she had been unavailable. I wasn’t concerned with much of what she had to say. My train of thought was essentially…forget that story, pay me! I got the money I was owed and I made a conscious decision to actively avoid similar situations in the future.
Moving forward, I implemented these simple commandments and you should too if you own a small business and want your money on time.
1. Only begin work with clients who demonstrate an ability to pay. If conversations about compensation are strained and leave you feeling uneasy, politely decline the business and walk away.
2. Set your own price and don’t allow clients to haggle you.
3. Be upfront about your payment policy and get it in writing,
4. Never begin work without at least securing a deposit, 50 percent preferably.
5. Stop working if a payment is delinquent and resume work once payment arrangements have been made.
6. Never deliver the final product before receiving the final payment.
7. Treat all business relationships as business relationships whether you’re doing business with family, friends, friends of friends, coworkers, etc.
8. Speak directly about compensation. If a client is actively avoiding the topic of payment, address the issue politely, but directly before payment is due and before a problem arises.
9. Be persistent. If a client owes you money, continue to follow up with them until payment is received.
10. If push comes to shove, utilize small claims court and collection agencies.
People deserve to be fairly compensated for the work that they do. If you’re a business owner, take the necessary steps to ensure that you get the money you’ve worked for every time. And if you’re patronizing friends and family who own their own businesses, stop fishing for a hook up and pay those people what they’re worth and ON TIME.
Sheena Bryant is a writer and blogger in Chicago. Follow her on twitter at @song_of_herself.