What is the craziest thing you've had to do as a business owner to get someone to pay a bill?
Have you had to chase people to get your money?
Plenty of times.
However, very early on I had our terms and conditions of trade drafted by a Debt Recovery Company, so when the client signed the Cleaning Proposal, they were signing off on all the debt recovery terms as well.
So, after say 90 days, and multiple emails advising ask for payment and advising them of the next escalation phase, we would just simply send them an email advising if that debt wasn't paid within x days, as per the T&C's we would pass it to our Debt Recovery Partner and all recovery costs would be added to the outstanding invoice as per the terms and conditions.
Often, it was paid next day.
Paying for correctly drafted T&C's was the best investment ever.
Yes, I have had this problem many times.
Often, emailing reminders and a phone call does the trick.
Other times, I've had to send letters of demand and even take one client to VCAT (tribunal.)
Final notices and letters of demand sent through the post usually gets a businesses' attention enough that they'll pay immediately.
I pay for CreditorWatch, which provides a suite of pro-forma letters of demand and intents to file defaults. Worth every cent.
Luckily I haven’t had issues getting paid, but I have had issues getting clients to sign contracts (which I suppose their end goal is to make it harder for me to get paid). However, if a client refuses to sign a contract, I remind them that I don’t need their business.
I have developed several different methods that have worked for myself and others that limit payment issues.
The first method is a discount for paying 100% upfront, you can offer typically a 10% to 20% discount. This doesn’t negatively impact your business because you need to raise your price by the percent of the discount (most businesses are under charging). By marginally increasing your price the upfront discount becomes more appealing and doesn’t force you to cut corners.
The second method is to have payment installments at agreed upon milestones. I would typically ask for 25% to 50% paid prior to work starting so I know the client is serious. Then at an agreed upon milestone or deliverable, another 25% installment would be expected. This helps the client see progress, and keeps you from spending a large amount of time on something without getting paid.
The third method is additional contract or agreement after the initial service is delivered. This is more about a project than looks like it will go into “overtime”. Before agreeing to just bill hourly after billing by a project, ensure you are paid for the initial project before taking on more work. Then agree to a minimum amount, such as 10 hour blocks. This again will deter clients that are just looking for additional free advice or add-ons.