In recent months I’ve heard a lot of clients complaining about not getting paid, so I thought I’d take a great idea to give you some advice on how to get paid. I am an avid Wall Street Journal reader. Please read this except from Independent Street, The Wall Street Journal blog about entrepreneurs.
Walk into small businesses across the country and you’ll often see a rumpled dollar bill framed on the wall as proof of the first sale that company made. It means: “I’m in business” or more precisely, “Look, somebody was actually willing to pay for my goods and services.”
When you’re starting out, there’s always a big of will-they-come fear lurking in the belly. Which is why so many entrepreneurs have a hard time cutting off clients who fall behind with payments. In the beginning, building relationships and cultivating loyalty has everything to do with success. But as you grow, so does knowing when to say good-bye to people who don’t honor that loyalty.
Here are the solutions of some readers:
“We have a small public accounting practice so we have a number of clients that suffer from slow-paying customers. It is hard for our clients (as it is for us) to fire customers, even bad ones. I finally have come up with two approaches—that seem to work. First, I recommend that they make a decision to discharge the bottom 10% of their customers every year. Those are the customers who complain ALL the time and pay late ALL the time and use 40% of our client’s time.
If I can’t get our clients to go along with the first approach, I suggest they try this visualization: Imagine someone new comes into their door and ask for products and says, “I would like this delivered and will not be paying you for it!’ Try this for a short period of time and then substitute your deadbeat customer’s face for this imaginary one. “Cause they are one in the same.”
“In a small law firm, I just enlarge my next case estimate, and require prepayment, I make the prepayment large enough that if they pay I am happy, and if they leave I am happy,. Also, there is a certain status for losing a troublesome client due to high fees.”
To see more on this post, go to WSJ.com/Entrepreneur.
This is some excellent advice that I couldn’t possibly say any better. This week look at your collection policies and processes and try to make some permanent changes for the good. Talk to you next week.