Monthly Archives: May 2011

A time to pay – part 2!

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This post is a follow on from ‘A time to pay’ so if you haven’t read that you might like to do so before reading this one!

Once you have decided on your payment terms, ensured that both you and your client understand what is to be delivered, and paid for your services, there is still the possibility that a client will let you down and not pay.

The most likely scenario is that the client is strapped for cash and you are not seen as the first payment priority for them. This is a difficult position to be placed in for any service provider. My advice is that you must stand firm and by doing so you may well move yourself up the payment list – especially if the client is looking for further work from you.

Just as an aside, I generally provide an ongoing service to clients and so agree with them a fixed price service, so they can set up monthly standing orders. This has proved to be a win/win strategy. Clients like it because payments are broken down into monthly bite sized payments and I like it because I don’t have to do monthly invoices and then chase for payment.

However, what I did not appreciate until a client pointed it out to me was that, for them, my payments had moved up into the ‘unavoidable’ category – along with rent, rates, electricity etc. Unlike other professional service bills which are paid as and when money is available, my payment is made as one of the first.

Now, many service providers get lulled into doing more work for a client who is not paying, because they believe that they will not be given further work if they insist on being paid. As in my previous blog I would most strongly urge you not to get into this way of thinking. Firstly, the surest way of getting paid for work done is to stop working until payment is made. Secondly, if the client is bad at paying why would you want further work from them – rather than using your limited time to work for a client who will pay!

If a client is unlikely to use your services again, you are in a psychologically stronger position. You may well not be so reticent in sending tough letters demanding payment. Or, in fact, starting legal proceedings. If you want to go down this route it is very important that you understand what your rights are and how best to proceed. My advice would be to use a payment collection service such as that provided by companies like Credebt. They take the hassle away and enable you to concentrate on more positive areas in your business.

Finally, as I said in my earlier blog, don’t be coy about collecting money owed to you. As long as you have done the job required, and to the standard agreed, you are entitled to be paid!

Fiona 🙂

A time to pay!

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Recently I have come across several service providers who are finding it difficult to get paid. This got me thinking about the psychology of payment.

There are clearly two sides to this particular coin – us and the client. We can be as much, or more, to blame as our customers for not getting paid, because of the way we think and act.

Firstly, as Brits we are sometimes embarrassed to talk to clients about fees and payment. Some business owners hide behind hourly rates, which means there is no upfront agreement about exactly what the client will be expected to pay. This means it is highly likely there will be disagreement and therefore delay in payment. Not only that, but disagreement about fees can leave a bad taste in everyones mouth.

Secondly, many service providers are slow to invoice, which means clients receive bills quite a long time after they have had the service. This sends a message to the client that the supplier is probably pretty well off and so doesn’t need the cash quickly (or the invoice would have been sent more promptly). Consequently it is more likely that payment will need to be chased.

Other suppliers do not make it clear what their payment terms are. Now, it is in clients interests to delay payment as long as they can (especially at the moment when many businesses are finding cash flow difficult) so if you are not clear on payment terms you cannot be surprised when payments don’t come through. Make sure your letter of engagement clearly states what your payment terms are and re-iterate these terms on your invoice.

Further to payment terms ask yourself the question ‘Am I a bank?’ If the answer is no (as I expect it is for anyone reading this blog) only give credit if it is absolutely necessary – and then ensure there is some allowance for interest in the price you are quoting! Otherwise, make your payment terms ‘payment on receipt of invoice’. You probably won’t get paid immediately but at least you can chase earlier.

I know business owners who don’t like chasing for payment, even if they have agreed a fixed price, invoiced promptly and have clear payment terms, because they think their good clients will think badly of them. This, in my opinion, is the worst ‘sin’ of all. Firstly, GOOD clients pay as agreed in the contract – a good client is not one who bitches about the agreed price and then fails to pay promptly. Secondly, we are business people who should expect to be paid for a good job done, so there is nothing to be coy about when it comes to asking for what you are legally and morally entitled to!

So, to recap:

1.  Agree clearly with your client the exact terms of the engagement both in terms of job to be done and fee to be paid.

2.  Bill as soon as the job is complete.

3.  Be clear on your payment terms and give as little credit as possible.

4.  Be professional! If money is owed to you do not be coy about chasing for it.

Fiona 🙂

Your good health!

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Do you think your personal health bares any relation to the health of your business?

I happen to think it does. When I am healthy, and fit, I am much more clear thinking and am able to deal effectively with problems in my business. When I am overweight (a particular problem at the end of the winter), and have not made the opportunity to get out and do some exercise, I find my business becomes more of a burden.

But how much time do we set aside to ensure that we are as healthy as we need to be to be effective business people?

Ironically, it is at those times when we really need to look after ourselves, because we are stressed by the pressure of work, that we find it most difficult to make the time to take exercise and eat properly.

So what is the answer?

I think that for many of us it is not the lack of time, but the lack of enthusuasm, for exercise which is the problem. There are not many times when it is absolutely impossible to fit in a 15-20 minute brisk walk. Similarly reaching for the chocolate (a particular source of comfort eating in my house!) is no quicker than reaching for an apple or pear.

If we are stressed, though, we argue to ourselves that we have earned what we really want rather than what we should have. We convince ourselves that we really are too busy to go for that walk – especially if it is pouring with rain.

I think the key is to accept that we are our own worse enemy, but be aware that we do need to try to be fit and healthy for the sake of our businesses as well as ourselves. Large businesses have accepted that they should do more for their staff by providing gym membership and private health insurance, because they believe it is in their business interest to do so. I think we small businesses need to start thinking in the same way.

Finally, I fairly recently got into the habit of having a monthly massage. I spend a lot of time in front of the computer and at the wheel of my car and so back ache has become a bit of a problem. I decided that the investment in time and money getting this sorted is more than paid back in my increased effectiveness. The back ache has gone and my general sense of well being increased – thanks Emma Treharne for that!

So the next time you have the argument with yourself that you should be working instead of walking, remind yourself that you are taking the break for the good of your business.

Fiona 🙂