A common issue for consultants is that sometimes the euphoria of landing a tasty project can evaporate very quickly when you realise that actually getting paid is going to be as much of a problem as getting the work was in the first place! I've been having some Twitter conversations about late payments and thought I'd share some of the ideas with you;
- check your client has received the invoice a few days after you send it - so they know you're on the case
- if you have any doubts about the clients financial status, ask for a deposit
- don't keep on working if you're not getting paid - if you do they don 't feel any pain - make it clear to someone to whom your work matters that lack of payment is a problem and will mean they don't get what they want
- get someone who's not directly involved with the client to chase the payment (I use my husband for this!)
Any other suggestions?
4 comments:
People sent me some very good tips for this yesterday via twitter including:
*Send 3 warning letters then threaten legal action
*Send a reminder on bright orange paper!
*Do a drive by pop-in if the client is local.
Some fun ones included sending the heavies round and also, putting ice down their backs which was my personal favourite! ;-)
From Duncan Brodie http://www.linkedin.com/profile/view?id=9753776
Gill I think one of the key things that can help prompt payment is your relationship with and service to the client. What I have found is that if you try to do your best for them they go out their way to help.
Having said that there are times when even the biggest organisations face cash flow challenges. In these circumstances it is worth building a relationship with the person who leads the Accounts Payable team, finding out when payment runs are made and making sure they have all the information they need to process your invoice.
Remember it is not any more pleasant having to field calls all day from suppliers who you are not in a position to pay than having to make the calls.
My view is always to aim to treat the people in the customers organisations with respect and professionally.
Peter Dickinson http://www.linkedin.com/profile/view?id=512818
- Keep your terms short - I use 14 days - sometimes clients actually keep to them!
- Send out statements each month - a lot of companies only pay on statements
- Have a set of letters that go out after 45, 60, 75 etc days to 90 days.
- Depending on your client base threaten handing it over to a debt collection agency after a set time. Just received from Howdens and I am only a couple of days over!
- As Duncan says in larger organisation really get to understand their purchasing processes so that you can chase it through their system - no use chasing accounts if it is sat on a manager's desk for sign off.
- Again as Duncan says make friends with the accounts department - most of the time they are the messager and it will be the company's payment policy (or lack of) that is holding up payment. Being on the right side of them can often help to get paid.
- Try to keep things polite and professional there may be good reasons why the invoice has not been paid.
- For smaller companies I know a freelancer who specialises in going in to companies and working through their aged debtors. A different person who is targetted on reducing the debts without upsetting the customers can be useful if you have a lot of debts to chase.
- Keep your own accounts up to date. You will know when debts are over due sooner rather than later.
There's been a lively debate on this subject on the Skillfair LinkedIn group - which Chris Farrance has kindly summarised:
If I may be so bold, here is a summary + some thoughts of my own - for a common factsheet perhaps?
• Make Cashflow Management an absolute and fundamental priority
• Be very specific about what the payment terms are
• Check credit reference agencies say Creditsafe
• Find existing suppliers to talk to about their payment experience
• Get a payment up front – say 30% - and then 30% for achieving a clear milestone
• Build a factor for late payment into your pricing – say 10%
• Offer a discount for prompt payment – but allow for it in your pricing
• Issue your invoices on time
• Take time to find out what the payment process is
• Phone client to make sure invoice has been received
• Use a third party to make chase up calls – friend or family – keeps you cool!
• Get to know someone who matters in the accounts department – they often respond to some TLC
• Chase immediately they become overdue – but don’t assume the worst – is it can pay/snafu or can’t pay/cashflow?
• Get a clear commitment as to when they will pay
• Chase up after agreed payment date
• If it stagnates, send out diarised letters 45/60/90 days
• Think about the Small Claims Court if under £5,000
• Use a debt collection agency
Will be writing up a factsheet on the subject asap
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