Judging by the volume of mail generated by the October 20 Issue of Week, “Getting Your Bills Paid” is a red-hot topic for small-business owners! So this week, instead of spouting off what I think, we’re going to share ideas from a reader about how SBOs can get their bills paid despite the lousy economy.
What You Think:
Peter Bowen, Bangor, Northern Ireland, emailed to suggest the following: …Fortunately, most clients pay on time or early. But the few that don’t can drive business owners up the wall! Before trying the online equivalent of punching them in the nose, think about the people who owe your business money and how you manage new client relationships from day one. Then answer these questions:
• Do you check their credit and trade references?
• Do you find out how a client’s payment process works?
• Do you specify when and how you want payment?
• Do you get a watertight contract signed before starting work?
• Do you take a deposit?
• Do you get confirmation that the work you do is satisfactory?
• Do you invoice promptly; are your invoices accurate?
• Do you remind clients before the due date?
• Do you follow up on overdue invoices within 3 days?
• Do you keep following up?
If you do all of that and still get stiffed, perhaps it’s time to stop running your business as a hobby.
We SBOs are often so keen (read desperate) for business, we’ll do things for clients without getting the basics in place. We hope they’ll be as honest about paying us as we are in delivering value to them. We work on trust and are then deeply offended when someone proves to be untrustworthy! Go figure!
That’s how so many SBOS end up solving today’s problem (too little business) by creating much bigger problems tomorrow: not being paid for the work we do. What we need is a set of rules to protect our businesses from our own enthusiasm–a way to improve cash flow and reduce bad debts.
I’m not suggesting that you send Ugly Mike around with his baseball bat. But I do suggest adapting the kinds of things that work for larger companies. For example, a system that lets your debtors know you’re as serious about getting paid as you are about the quality of the work you do.
Letting the System Do the Work
When times are tough, even people with the best intentions can have a hard time juggling bills. However, that doesn’t mean we can or should let them slide—even for a little while. It’s bad for business, and sets an even worse precedent. Out-of-sight, out-of-mind is very real: people pay attention to what’s in front of them. That means you need to be there at the right time with the right message.
You won’t offend clients by asking for timely payment in the right way. People have come to expect businesses of all sizes to send a series of gently escalating reminders when they’re late in paying their bills:
- A polite reminder arrives few days after the due date.
- If they still haven’t paid, another reminder is mailed a couple of days later.
- The next letter has red writing across the top.
- If that fails, it’s time for a final demand and then off to court for default judgment.
That’s the heart of the system, and the system does the work. It’s turnkey, automatic and impersonal; but it’s also relentless in looking after your business interests. It takes the emotion out and leaves you confident that you’re doing the right thing. It will improve your chances of being paid on time and reduce bad debt. Moreover, by managing invoices before they’re overdue you’ll improve cash flow while showing clients that you’re serious about your business as they, no doubt, are about theirs.
If you’ve been looking for a system like that, try going to http://www.getting-paid.com/
You’ll find an easy-to-use automatic invoice-chasing system for small and medium-size businesses. It’s like having an in-house credit manager for the price of dinner for two! No more wasting hours of productive time fuming at people who don’t appreciate your work!
Pete Bowen fell in love with business during the first week of primary school, when he realized he could make and sell eye-pokingly sharp wooden swords. It took about 3 days for the teachers to shut him down but ever since then he’s loved small business and enjoyed the company of small business owners. His primary interest now is in using technology to automate the repetitive tasks that have to be done to make your business tick. Business owners get much better results when they’re driving the business rather than being the engine (When they don’t let running their business interfere with running their business!). Pete has a degree in civil engineering and is married with 4 children.
What Do You Think? Your comments are welcome. Have you registered?
Bill Willard is a freelance writer in Clearwater FL. He has been a high-impact writer and editor for over 30 years. In addition to his byline pieces, Bill’s beat includes ghostwriting and editing for businesses of all types and sizes, professional practitioners and individuals, and he is a www.thefreestyleentrepreneur.com Contributing Author.
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