If you work with clients, the chances are most of them want their jobs done first before that make a payment. It strongly discourage this. I have learned from experience that any client who is not willing to make an upfront payment is not worth the hustle. They will create problems for you in the future.
It is very important for you to implement a policy that you require full payment upfront, and do not begin the work until the payment is received. This is a scary step to take for many business owners, because they fear that they will or might lose business from potential clients who might be averse to this policy. In my own experience, it rarely deters clients - and when it does, it deters the kinds of clients who I do not want to deal with anyway. In the end, it minimizes headaches, reduces stress, eliminates money-chasing, and establishes an expectation of trust.
If you are not ready to implement such a policy, then take the next step. When you initiate any new contract with a client, outline clear policies about late payments, and require a signed contract acknowledging these policies. If you are providing a service, it is customary to set milestones and deliverables from the beginning, especially on large projects. These milestones should outline what will be delivered by you, the provider, along with the payment amount that will be due at the time of that delivery. Your wording should also stress that if payment is not received within a certain number of days, the contract will terminate. This will keep you from investing months or years into a project, only to never see payment.
For short-term projects, it is still OK to require partial payment as a deposit before work begins. Many tradespeople and professional service providers ask for a 50 percent deposit at the time contracts are signed as a good-faith payment. Even with this in place, however, the final half may be late in coming once work is complete, leaving a business to decide whether to continue with the next project the client is requesting or wait until payment on the last project has been submitted.
Your policy should outline how late payments will be handled, including service charges at set intervals. Each state has its own regulations, but in general this is charged as a percentage of the total due. Some businesses have found taking a more positive approach to this is more effective, though. Offer a ten-percent discount to any client who pays his invoice early or on time and you may be surprised how many debtors take you up on it. If you do opt to take a late-fee approach, be sure to look at it as more of a deterrent to late payments than a money-generating tool for your business. HAVE A GREAT HUSTLE.
It is very important for you to implement a policy that you require full payment upfront, and do not begin the work until the payment is received. This is a scary step to take for many business owners, because they fear that they will or might lose business from potential clients who might be averse to this policy. In my own experience, it rarely deters clients - and when it does, it deters the kinds of clients who I do not want to deal with anyway. In the end, it minimizes headaches, reduces stress, eliminates money-chasing, and establishes an expectation of trust.
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| LESSON #4 Set A Cash Upfront Policy. |
For short-term projects, it is still OK to require partial payment as a deposit before work begins. Many tradespeople and professional service providers ask for a 50 percent deposit at the time contracts are signed as a good-faith payment. Even with this in place, however, the final half may be late in coming once work is complete, leaving a business to decide whether to continue with the next project the client is requesting or wait until payment on the last project has been submitted.
Your policy should outline how late payments will be handled, including service charges at set intervals. Each state has its own regulations, but in general this is charged as a percentage of the total due. Some businesses have found taking a more positive approach to this is more effective, though. Offer a ten-percent discount to any client who pays his invoice early or on time and you may be surprised how many debtors take you up on it. If you do opt to take a late-fee approach, be sure to look at it as more of a deterrent to late payments than a money-generating tool for your business. HAVE A GREAT HUSTLE.
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