Today’s post deals with one of the less-enjoyable aspects of contracting life: getting customers to pay you if they’re late. I’ll share some of the approaches I’ve used and the avenues others try when there’s money involved. It can be tough out there.
The Sources of the Problem
There are any number of reasons your customer or client might be slow to pay you. Before you start getting upset, it’s good to check your assumptions:
- Did you submit your invoice?
- Did you submit it on time?
- Did you fill it out correctly? This one has gotten me into trouble occasionally, as has the timeliness thing. <blush>
- Is your employer a single individual or a larger corporation?
- Are there issues on the customer’s end of which you are unaware?
The purpose of asking all these questions is obvious: you don’t want to say or do something unnecessarily hurtful or derogatory when it turned out you yourself were to blame.
The first question you might ask yourself is, “How late are they?” If they’re paying by paper check and they’re not local, you have to allow a certain amount of understanding for things like mail delays. If they’re paying via direct deposit and usually regular as clockwork, you can call someone the same day you expected to be paid.
If you’ve got a single-person customer, they (like you) have a lot of things they have to keep track of, from their actual work to marketing and paying the bills. A polite email reminder or phone call is warranted just to ask…again, after you’ve taken all of the above into account.
If the customer responds promptly, apologizes, and promises to get right on it, I usually give them another week…or a day after they tell me I can expect a direct deposit to hit.
If I receive no response, the emails after that will be a bit less friendly, but still polite–I’m a big fan of politeness in my professional dealings.
Another thing that will determine how quickly I will turn into a pain and start asking for a manager (in a larger organization) is the size of the check. If it was an hour’s worth of work, I might be less pushy than I would about something that took me a whole day, week, month, or longer. The customer should also be enough of a professional to recognize the need to pay on time. I bill my customers “NET 30,” meaning I expect the net pay within 30 days of submitting the invoice. I don’t start pushing until after the 30 days has expired.
What to Do When the Problem Persists
Again, there are any number of reasons your payment might be late. The accounts payable (AP) manager might have taken ill and caused a backup in approvals. The company might have acquired a new billing system. Your customer within the company didn’t approve the invoice. You might not know or even find out the truth. That doesn’t mean you let things go. You are a business person: you do your work and you expect to be paid for it. You should be out to fix the problem, not fix the blame.
In one situation, I did a small job for a single person and didn’t get paid on more than one occasion. After the second occurrence, I insisted that they pay in advance. That person stopped being my customer. Lesson learned.
In another situation I had to ask around the company only to find out that the AP manager was waiting on my customer to approve the invoice…but then the customer hadn’t received the request for approval. Honestly, I didn’t care who screwed up, I just wanted to get paid.
Another trick I’ve played–and I don’t like this, but I wasn’t sure how else to go about it–was to inform the customer (the person I did the work for) that I wasn’t paid so that they would poke at the AP department. This allowed me to do two things: 1) a more direct response because the customer knew who in AP was responsible for handling my invoices and 2) it wouldn’t just be Consultant X nagging them but a fellow employee. And the polite requests for follow-up would go to the customer and AP once a week for as long as the payment didn’t appear.
There are other options, of course.
- Some people call the company and angrily demand to speak to someone in authority who will eventually give them what they want. I saw this behavior quite often among the more persistent guests when I worked in the hotel business. It’s an exhausting way to spend a day.
- Some people hire a lawyer, which is an expense until itself, and might end up costing more than the original check. Plus, businesses don’t like litigation. It’s a time and money expense, tends to lead to hard feelings, and more than likely sours or ends the business relationship.
- Some folks will vent their anger on social media, hoping to shame their customer in the fever swamp that is the internet.
- Some will contact their local “action news reporter,” hoping that the fear of having a reporter asking questions of them on live TV will provide the necessary leverage.
I don’t operate that way. And, again, all of the angrier responses I just mentioned are likely to ruin the business relationship, depriving you of one particular payment as well as any future work or payments to follow. This is all a long way of saying, “If you have a legitimate complaint, maintain your cool, professional demeanor for as long as you can to ensure that the situation is resolved amicably. On the other hand, if you’ve been repeatedly deprived of payment, you might just accept the end of the working relationship and consider it an expensive lesson learned. Choose your battles and determine what level of stress you’re willing to tolerate before you start an argument.