Debt collections and accounts receivable can be a real headache for small business, professional service firms, and freelancers! How are you supposed to stay in business if you can't get paid for your products and services?
Here are 10 things that I can tell you with certainty will help smaller operations whose clients are the same. Ask yourself these ten questions about your business and your clients. Give them some thought before your next engagement with a new client. Adjust your processes a little bit. You either have someone who owes you money and isn't paying or you will. Be prepared for it.
1.) Are you looking before you leap into time consuming projects? Don’t jump headfirst into projects. People, companies, and shiny wordpress sites ARE NOT a guarantee of status or integrity. ANYONE can have 500 Linkedin connections, thousands of twitter followers, phony Facebook friends/likes, and a well designed website claiming whatever they want; all set up within a week or so. You need to verify that there is substance behind it!
2.) Do they have a phone number, address, email, and/or anyones name/s published on the site? Gather as much contact info for them, their company, and their associates as you can! Cross reference it all online and fact check things that they tell you.
3. ) Is your contact easy to reach? Do you have any other contacts with their company? How fast do they reply to calls and emails? Information is power, gather as much info as you can up front, then update and add to it as you go along. Sometimes there may be only one person in the company and that's fine, just make sure that one person communicates properly and has an ounce or two of integrity.
4.) Are you documenting that you're the good guy? Communicate clearly about what they want, how they want it, and when they expect it. Discuss these things in detail, and document the agreement with a signed/dated contract, and then continue to document important things via an e-mail chain especially if the project veers even one iota off the original written agreement. If you can’t prove it, IT DIDN’T HAPPEN!
5.) Do some research on your client. Google is your best friend, use it! Many times there are immediate red flags. You have to work smart on this process when you and your client are too small to operate based on credit ratings etc. Remember many of these clients have no credit, and use no credit, you have to think ahead about what your leverage and recourse will be if they try to run off with your payment.
6.) Do they have a current social media presence? This one isn’t an exact science, but I can tell you the businesses we chase have usually gone quiet on all online avenues once they are facing financial trouble. Having done this so many times, I can profile subjects extremely accurately based off a few simple factors. You can too eventually. On the flip side many unsavory scammers are out there posting bible verses on Linkedin the same day they steal thousands from a reputable business.
7.) Do they have an office? Believe me there are plenty of reputable businesses that are operated from home, small offices, remotely, whatever. However, if a business professes to be an international corporation with say thousands of employees, and there address can be traced to a double wide on google maps, then that’s a red flag. Basically, are they professional or are they at least what they claim to be? I've chased plenty of "Chief (fill in officers)", people with glamorous online profiles that make them look rich claiming "I love my life", and so on only to find out I am chasing what is basically a career criminal who takes advantage of everyone within 5 feet of them. Use caution or get burned.
8.) Are they an actual legitimate business? Knowing how their operation is set up from a tax standpoint can give good insight. Are they a self employed contractor under their personal name? Do they have a registered Corporation or LLC with the Secretary of state? Is it in good standing? How old is it?
9.) WHEN will they pay? Get paid as quickly as possible. The less time and service you put out without payment the less you are at risk to lose! Don’t do $2,000.00+ worth of work ahead of time without talking details and then get surprised when a problem arises. Give it some extra attention, and recover $500 at four points in the project. You give them an inch, they will take a mile! So have them pay by the inch if it’s acceptable in your industry, or at least with high risk or new clients!
10.) Are you doing your part? Remember that you must do your part as well. If you aren’t performing as agreed and being reasonable as well, you cannot expect them to pay good money.
So in closing, be thorough, precise, and do not leave any gray areas no matter who you are working for. Listen to your gut. We are all in business to get paid, and it is not unreasonable to take that seriously.
If you need help with any of these things we have a menu of services designed specifically to take all the time, stress, and headache completely out of the equation for you. You're not too small to have one of the countries best representing you in strengthening your cash flow processes and making sure you're not losing unnecessary profit.
Contact the Author:
President & Principal Consultant
Cambridge Receivable Solutions, LLC
New Clients: 636-487-0986
Toll Free: 1-888-908-3905
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