Getting paid

Most of us are in business because we are doing something we love or are good at.

We didn’t go into business because we are good at negotiating a price for our product or service and then collecting payment when the work is done.

Without sorting out that part of business however, we could end up being busy but poor.

So how do you reduce the risks of not getting paid?

Here are a few steps which could apply to most businesses:

1. Agree a price in advance for your product or service.
2. Agree payment terms and ideally have a formal written agreement which outlines the work you will do, when it is finished and when and how you will be paid.
3. For new customers or start up business ask for some or all of your payment in advance.
4. When the work is done send your invoice in a timely manner.
5. Follow up if the customer doesn’t adhere to the payment terms.
6. Use the small claims court if the customer persistently avoids paying or breaks promises to pay by a specific date.

These steps won’t guarantee you will be paid every time but they will reduce your risk.

Another good tool in your ‘getting paid’ box is , ‘change orders’ or variations to your contract. These are important when you start off doing the work you were asked to do and the customer keeps asking for something else.

Referring them politely back to the scope of work in your agreement is a first step. If they want the new work doing and it is material, this is where your change order comes in to agree new terms for the additional work.

Someone once said that stripped down to the basic processes, business is simple - ‘make, sell, bill, collect’.

The last one can be tricky to manage but if you want to stay in business you need to do it well.

If you are a one person business you will need to do the collecting yourself. For established or growing businesses, having robust processes and resources in place to manage this key activity is essential.

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