If I had a dollar for every time one of my clients said, ‘But we got on so well,’ I wouldn’t have to work another day myself! The fact is that when it comes to business, you can’t rely on your personality, good looks or ‘fabulous rapport’ with your clients. You have to do the work and get paid for it. It’s a simple transaction. Sure, you can be nice but you have to get paid and get paid on time.
Last year alone, I recovered more than $6 million owed for unpaid work. Money that was due and agreed upon to be paid to my clients, most of whom are hardworking small business owners. Many had let these unpaid invoices lapse over months, even years,
either because they ran out of time, energy or didn’t have the ability to chase down their money.
In these uncertain times, it is even more important than ever to maintain your cash flow so you can not only survive now, but thrive later.
Here are my top 4 pieces of advice to ensure you never have to chase down another late payment but if you do, you know what to do:
- Be bold – when you lay down your payment terms, stick to them. If you’re on 30 days and you don’t get paid, then issue an immediate reminder. If still no payment, then go straight out and issue a letter of demand. Make sure you say this is the first and final notice and after this it will be escalated to a third party.
~Novel Serialisation: Heavens Fire~
- Suspend Work – there’s no point in working for nothing. The most powerful thing you can do to your client is to withdraw labour. Advise the client you are going to stop work until you receive payment. Don’t worry about ‘spoiling the relationship’. In fact, you can be perfectly pleasant about it – it’s just your company policy. After all, if you have invested in wages or supplies, the last thing you want to be doing is digging yourself further into debt. Spend no more time. Spend no more money. Redirect your energy. Switch to another project, go after a new piece of business. Then, when you do resume work you can start off on the right foot with a common understanding to set the record straight going forward. If the client doesn’t pay then you got out at the right time.
- Escalate Escalate Escalate – if the client does not pay, don’t waste time and energy chasing something that just isn’t going to happen. Seek professional assistance. You need to up the ante and make your debtor feel that another hand is now involved. This is powerful and changes the dynamic. Before, they were comfortable ignoring you and you were worried. Now you are in control and they will be worried. You can go to court, mediation, community justice centres, expert determination, relevant tribunals, or the industry ombudsman.
There are many options aside from litigation that will have the effect of escalating the situation on your debtor. And that will make all the difference. So many of my clients tell me they wished they had come to see me sooner but the average time they wait is eight months, long after the job is over and the agreement is long finished. It makes it even harder to recover the money owed when everyone has packed up and moved onto the next job.
- Be strong – trust the value of your work and what you have delivered for your client. Remember, you agreed at the outset what was to be done and you did it. You fulfilled your share of the agreement – now they must fulfil theirs. Don’t waver, wondering whether the job was good enough or doubt yourself. Trust in the value of your work and hold onto that as you follow through to ensure you are paid what you are owed. It is your money. Go after it.
Question: How do you handle late payments? Do you have a story or any tips to share?
By Anthony Igra
Contractor’s Debt Recovery specialises in recovering monies owed for small businesses. Last year Anthony Igra and his team recovered $6 million. For further information, visit: www.contractorsdebtrecovery.com.au; call: 1300 669 075
Great article!