Collecting debt can be tricky and can take a toll on your business and relationships. Here are 6 tips to ensure you get paid!
#1 – Agree on Terms and Get a Deposit
Your payment terms should be incredibly clear and well written. Be sure to get a contract, in writing, that stipulates that both parties agree to the payment terms. Additionally, your payment terms should include a clause that requires a down payment or deposit upon initiation of the agreed-upon work. It can be as low as 5% – but simply requiring a bit of money up front drastically increases the likelihood that you will be paid in full down the road.
#2 – Incentivize Prompt Payment
One of the best methods for collecting on time is to offer an incentive to the client to pay in full immediately. That deposit we mentioned above? Offer it back to your client if they pay in full in 30 days. Or, give them a flat discount or discount on future work. It may feel like you’re shortchanging yourself, but remember – 90% of the money in hand today is way more valuable than 100% in 3-6 months… especially in this economy!
#3 – Invoice Immediately and Undoubtedly
Your client should receive an invoice electronically the day of or after project completion; on that same day, you should mail them a physical copy of their invoice as well. Follow up after a business day or two to ensure that they received them. This will show the client that you are eager to collect, and also that you are the type of business that keeps a very close eye on their accounts receivable.
#4 – And Also? Invoice Repeatedly
Now, sending an invoice ASAP and following up right after is a great start. Now stay at it. Send them an invoice once a week for the first 23 days, and twice the week the first 30 day period is up. It may seem like overkill – but the #1 reason clients give when asked why they didn’t pay on time? “We didn’t know when it was due”. Disarm them of that excuse by repeatedly restating the payment terms and date.
#5 – Offer Alternative Payment Terms and Methods
Look – it’s smart to have strict and rigid payment terms. Sometimes, though, it pays to be a bit flexible. If you have a great (or big) client that asks for some leniency on their payment terms or timeframe, it’s not a bad idea to work with them. Often, a flexible payment system is the only system that will get you paid at all.
Just be sure that the client honors the new payments terms, in writing, and then follow the first 4 tips above.
#6 – Call the Pros
Sometimes, what you’re owed will just not be recoverable by you – or you’ll recover some, but end up spending so many man hours collecting debt that it just doesn’t make business sense to continue. You need to know when to call in the pros – and that’s generally after 60 days of delinquency – or 90 days from invoice date. Once they’ve passed this deadline and have not made any good faith effort to pay, it’s time to call in the pros… and that’s where we came in!
Focus on Running your Business – Let us Focus on Collecting Debt
All of these tips can help you get paid what you’re owed. However, nothing is guaranteed, and as mentioned above – you need to know when to call in the pros at Gilliam & Mikula.
The attorneys at Gilliam & Mikula specialize in collecting debt. We are committed to getting you what you’ve earned, and when the time comes – we’re here to help. Start the process by filling out our online form. We look forward to working with you!
Gilliam & Mikula, PLLC, is centrally located in Richmond, Virginia, and serves clients throughout the Commonwealth of Virginia. Our attorneys have over forty years of combined experience in various practice areas, representing individuals and businesses. We are licensed to practice in all General District Courts and Circuit Courts of the Commonwealth of Virginia including, Central, Tidewater, and Northern Virginia areas.
The attorneys at Gilliam & Mikula are here to smoothly guide you through the “legal maze” and ensure that you achieve the most favorable outcome.
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