If you’re a business owner or independent
contractor, you’ve probably dealt with clients who fail to remunerate you in a
timely manner. It can be awkward.
Of course, you’d like your late-paying client to
expedite the payment you’ve earned. On the other hand, you don’t want to
alienate someone who might otherwise have been inclined to retain your services
again in the future, and perhaps tell h/er friends and associates how exemplary
your work was.
How can you encourage clients to make timelier
payments without sounding overly pushy, souring a professional relationship,
and potentially undermining your reputation?
Agree in
advance on a payments system that is convenient for the client.
You’ll probably find that different clients have
their own preferences with respect to payment methods. Some may favour writing
cheques, others may be more comfortable with PayPal, bank transfers, credit
card, or even in-person cash transactions.
Set up accounts with multiple secure payment
processing services and through your bank. If the client can choose among
several payment options, s/he is likely to find one that is convenient for
h/er.
Expect to
receive payments late, and plan ahead.
As a general rule, you shouldn’t depend on timely
payments from invoiced clients. Instead, try to keep a fairly robust cash
reserve on hand to cover your own short- and medium-term expenses.
Although you want to encourage all clients to
pay on time, realistically you’ll almost certainly encounter laggards here and
there. One way to compensate for this is to request payment on a date well in
advance of the time when you actually need the money—if possible, leave a
margin of at least ten days.
Remember: you’re unlikely to suffer
significantly negative consequences from being paid earlier than you expected.
Be clear
and specific about when you expect to be compensated.
“Payment on this invoice is due within 20 days”
as opposed to “Payment due upon receipt.” (In the latter case, your client
could invoke the phony excuse that s/he received your invoice late.)
The clearer and more comprehensible the
instructions, the less of an excuse the client has for failing to follow them.
Consider
an early-bird discount.
No one enjoys wasting money, and by offering
your client a slight discount for early payment, you introduce a direct
economic incentive in favour of timelier compensation. Even a discount of one
or two percent can provide your client sufficient impetus to get the ball
rolling sooner.
Alternatively, you could institute a penalty of
one or two percent for late payment.
Send
cordial reminders.
If a week or more has passed since the deadline
you originally established for payment, it’s reasonable to send the lagging
client a gentle reminder, indicating that you would appreciate being
compensated for your work as soon as reasonably possible.
Withholding
of services is a drastic, but sometimes necessary, step.
You won’t need to resort to withholding services
in the vast majority of cases. However, you may encounter a handful of
situations in your career where there is simply no reasonable alternative. Your
client has failed to pay up despite numerous polite reminders, and you need to
draw a line in the sand.
Your skills have value in the marketplace, you
can’t afford to work for free, and you don’t want to garner a reputation for
being overly lax on clients who refuse to keep their end of the bargain.
