Dealing with clients who don’t want to pay up after work has been completed for them is one of the unpleasant, yet inevitable parts of running a business- and that’s any service-type business. But these situations can be particularly painful when your business consists of you and maybe a few employees, and especially at the beginning when every paying customer just counts so much more.
That said, many freelancers and small business owners completely misunderstand the best ways to ensure that they’ll get paid for the work they put in and to weed out the rotten tomatoes before they start spoiling the garden.
As a freelance writer, I’ve had clients who agreed to pay a certain price for a project, then when it was completed tried to renegotiate the price- all while claiming that they were doing me a “favor” by paying me anything at all! Others would simply stop responding to emails and phone calls mid-way through the job.
It didn’t take many such experiences before I realized that my whole approach taking on clients had to change. Here are the most important tips and strategies to implement in order to avoid the clients who don’t want to pay you for your work, and to protect yourself even when such things happen:
Preparing and Protecting Your Business from Clients Who Refuse to Pay
Take yourself and your business seriously… Because if you don’t take yourself seriously then your clients won’t either, and those are not the kinds of clients you want. The implementation part of this tip is to take a good, hard look at the way you are presenting yourself and your business to potential and current clients. Are you clearly communicating your unique skills, experiences, services, personality, etc? Does your online presence look credible? Are you well-versed on the needs and wants of your target audience?
Create a clear pricing policy. Realize that your pricing policy is going to be a work in progress that will evolve as your business evolves. So, don’t just create it and leave it. Also, make sure your prices are within a frame of reference that your clients can understand. Do you charge by the hour? By the project? By installments as milestones are achieved?
Moreover, are you communicating the value of what they are getting? Make sure your pricing is clearly displayed or that you have a pre-made price list that you can send via email. Having this in place is as much for you as it is for your clients because it puts a monetary value on your time and effort.
Get something in writing. It is extremely important to get a signed contract before you begin work on a project. Don’t be afraid that it will push potential customers away. If any clients are hesitant to send you a signed agreement, then they are probably not the ones you want to be working with. In almost all situations, a written contract is a must.
It’s also a good idea to have worked into your policy what will happen if either you or your client doesn’t meet the contractual obligations. You should strongly consider putting some kind of late fee, interest, or other clauses into the contract that will kick in if a client does not pay in full or on time. Not only does this protect both you and your client, but it gives over the message mentioned above that you should taken seriously
Set up an invoicing system. You don’t have to resort to an Excel spreadsheet to manage your billing and invoicing even if your business is really small. There are plenty of cloud-based options to choose from. If you have a lot of clients each month, and several users will need access to the billing information, then a service like Freshbooks may be the best option. If you’re on a tight budget, you should look into Paypal’s free invoicing feature, as well as Zoho Invoice, which has a free version supporting one user and up to five clients a month (Zoho’s paid version starts at $15 a month for 3 users and 500 customers, which is pretty reasonable).
Not only will this give you an easy, yet accurate system for keeping all your billing records, but you can set up your system to automatically send past due notices to no-paying and slow-paying clients.
Get clients to pay upfront. One of the best ways to ensure that you’ll get paid for your work is to require a partial to full payment before you take anything on or offer any advice. This can also act as a kill fee later on. You should have a standard script in place that can use to direct potential clients to your payment page. Explain that you are excited to start working with them, and that their payment is the first step in the process.
When clients still try to haggle you down. Even with all of these precautions, you may still get the occasional client who will try to knock down your clearly stated prices. There are only two ways to really deal with these people:
- If it’s possible for you to create a lower-cost option or service to offer- for example, you only do a part of the job- that may work for some clients, and it will help to keep the doors open.
- For the majority of these people, however… just let them go! I suggest that you have a script in place for these kinds of situations. You could say something like, “In order to deliver a quality service, I have to charge this price; otherwise I’d have to rush through the work. I don’t want to rush the job, because I pride myself in giving my clients quality, valuable results. I am therefore unable to accept the price you are requesting.”
In short, by recognizing the value that you bring to the table, formalizing the process of turning leads into clients, and having clear pricing and billing procedures in place, you can protect yourself from the clients who don’t want to pay you and strengthen your business in the process.