Most contractors, consultants and even agencies that have been in business for five or more years have probably encountered a client or former client that was either slow to pay or refused to pay.
This situation causes frustration, angst and for some even loss of sleep. I know, I’ve encountered this myself and unfortunately it’s happened recently which made me realize I needed to help equip consultants,
contractors and businesses with what they needed to know when it comes to protecting themselves from non-paying losers.
You’ve put in time and effort, produced the work and delivered it to the client. How can you ensure that you are paid for your services?
- Set Expectations with a Contract / Agreement
Ensure that you have a contract and/or agreement for services that will be rendered. The contract needs to be clear, what services will you performance and what will be the cost? How is the cost determined? Is it a flat rate or will it be billed hourly?
Your service agreement should leave no guess work and be crystal clear in case you find the need to take someone to court because they refuse to pay. Fortunately in my case I have agreements as well as emails confirming approval for the work. Keep everything documented, whether it’s emails or formal agreements!
- Be Clear About Payment Terms
Make sure that your payment terms are clear. Will you be paid at certain milestones, 30 days, and 60 days or is payment due on receipt of invoice. It’s important that the client you are working with his clear on when payment is due. I’d also suggest not surrendering completed work such as web design, marketing plans, or final graphics until payment is received. It’s not uncommon to ask for a portion of the payment upfront.
- Use Change Orders to Document Contract Changes
Document any changes to the original contract, we call these change orders. Once you’ve documented the change order showing the additional cost have your client sign it acknowledging the additional work as well as the additional cost for the service.
- Provide Easy Payment Options
Provide easy payment options for your client. I actually prefer credit card payments, this allows me to charge a portion for the service upfront, at mid milestones and final payment. This helps in not having to chase down the payment. Put the payment terms in the contract and you can bill them when all work is completed.
- Follow Up If Payment is Late
It’s important to stay on top of the invoice, be sure and follow up the first day the payment is late. This lets them know that you are waiting for payment and keeps you in the forefront of their mind.
Now, while the above steps will help in making sure you get paid you may still run across a client that doesn’t pay you. Rest assured you are more than likely not the only one they’ve done that to. It’s unfortunate but it happens more than we’d often like to acknowledge. If after following the steps above you still haven’t received payment, it’s time to compile all of your documents and consider heading to court. Don’t let people get away with stiffing you of a payment you deserve. If you do they will just keep doing it to other vendors and at some point it really does become more of a matter of principle.