Whether you are working in the creative industry or have your gadget store, it’s not easy to avoid the “elephant in the room.” There are multiple mistakes even experienced entrepreneurs make while setting up their business practices and culture, which makes it harder for them to recover payments from their clients. For an entrepreneur, the payment made from their client’s end is their lifeblood. Clients’ negligence can even halt the business itself, especially initially, as client payments fund the company’s future bills. The internet has grown so fast that people use multiple methods to approach their clients globally. However, not keeping a secure payment method has caught our attention regarding the missed or late payments from the clients’ end. Although, the clients, especially those who are using the internet as their only source of communication, are skeptical regarding paying in advance. Therefore, expecting them to pay a complete upfront payment is not possible at an initial level when you have just started your business. At times, clients make unnecessary delays or deductions after the delivery of their desired product or services, which is accounted for as a bad debt account for entrepreneurs.
If you are struggling with this issue, here are a few practical pieces of advice for you that can help recover your stuck money and even help you avoid such scenarios.
Tips to Secure your Payments
Choose the Right Client
Your ideal situation is when you only attract paying clients. Evaluate the clients as they approach you for your work, as this will make it easier for you to shortlist the clients you want to work for and benefit from. Here are a few tips from which you can easily choose the right client base.
Raise your Worth
Selling a product or offering a service? Keep your rates at or above the market price. Selling services at a too low price will make you more approachable to frauds or less ethical clients. However, the people who are satisfied with your quality of work will be willing to pay you the average market price or even a premium price for your quality.
Design a Proper Payment Policy in Advance
Once you have a proper payment policy for your product or service, the client will get an idea of your fixed payment policy. This will depict your professional attitude towards your work. Your professional policy should cover all the aspects of your best practices as it will prevent fraudulent cases. The policy should include:
- Your invoice duration, such as weekly/bi-monthly/monthly, or project wise
- Your terms of payments
- Penalties in case of any late payment
- Your detailed rate structure includes the basic per hour rate and monthly rate of that project
- Payment methods that are acceptable to you
- How you will handle late payments
- How your company will recover missed payments from the client
Identify your Clients while they Talk
Do not waste time after you have invested your work and money in providing the customer’s desired product. Dealing with late or missed payments later is a frustrating experience. Therefore, one should identify the seriousness of their clients before they start to work on their project.
- Avoid bargaining
- Understand the client’s psychology and their potential to understand you
- Get a contract signed, even for smaller payments/projects
- Look for clients through references as this will be a more solid and secure source
Always Maintain your Records
Bookkeeping is an incredibly valuable and necessary part of an entrepreneurial business. The most successful strategies for keeping your payments secure are recording all of your transactions, bad debts, and accounts receivables in detailed records that can help you analyze how much work you are providing and how much you are owed.
Be Serious about Getting Paid
Sitting and waiting for payments will not solve your problem. You need to be proactive in seeking all your expected payments personally.
- Contact the clients as soon as the deadline has passed
- Start charging interest on late payments
- Keep nudging the client, even after a month or so
- Send a demand letter to the client’s address
- If you are still unsuccessful, contact a collections agency
Be Ready to do Something
Starting up your own business is not a cup of tea, and managing it is a much more challenging job. Dealing with your employees as well as your customers is a difficult task. If a client misses their payments or cancels the payment altogether, you should not wait for the result. Instead, you should adopt a proactive approach regarding the issue.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.