Unfortunately, your experiences are not uncommon among new business owners and freelance entrepreneurs. Each month, thousands of people leave corporate America for a more independent and satisfying work day. But often when our work is highly creative and enjoyable it's easy to jump in and do the work, not adequately prepare for administering the work.
As long as you stay in business, you will come across slow payers and deadbeats who assume you aren't determined enough to pursue payment. If you let them take advantage, you jeopardize the very work and lifestyle you love. That's a much higher cost than the amount you are trying to collect today!
Because getting paid is fundamental to business survival, you have to be completely dedicated to collections. This doesn't have to be time consuming or expensive. In fact I bet you will find it empowering.
So what do you do next? Before signing up another customer, visit your county's small claims court web site. Familiarize yourself with the rules for filing a claim. No lawyer is needed and in most cases the filing costs are below $30. You'll find there is nothing to winning a judgment as long as your case is well documented.
Next, develop your company's own "collections policy." For example, "If a bill is 15 days past-due, I will immediately place a call to the client. At 30 days I will send a letter with a second statement copy. At 45 days I will visit the client and ask for payment. I will not hesitate to take action!"
You'll likely get paid when you visit the client because it's easy to ignore collection letters; much harder to ignore a friendly face. Your meeting objective is to discuss any work quality concerns and the client's attitude about payment. Ask outright: "Do you intend to pay this bill?" If the answer is negative, be courteous and calmly state that you will take the case to an independent judge.
Forget collection companies that are expensive and largely ineffective for young companies. Small claims court will be the fastest, cheapest way for you to collect overdue bills. To win in any court, small claims or otherwise, you need supporting documents to show (i) client acceptance of the proposed work; and (ii) work completion.
Here are some other ways to reduce non-payment risks:
- Get a non-refundable down payment before beginning ALL work and if possible, don't leave a job site without final payment. If your county's small claims limit is $4,000 and a job is priced at $6,000, get a minimum $2,000 down payment.
- Ask clients to purchase paint and other job materials. Keep out-of-pocket costs down.
- Write a detailed work proposal for client signature. Include sketches, project cost, payment terms, interest charges and the right to recover attorney's fees for dispute resolution. Also include a payment amount for cancellation before job completion.
- Always take "before" and "after" photos.
The key to collections is taking fast action. You've already worked hard for your client. With a few more decisive steps, the money will soon be in your rightful hands.
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I am an artist and did an extensive faux painting in a client's dining room. After completing the work, my client refused to pay. She won't return my calls or tell me what's wrong. I feel uncomfortable dealing with this stuff and can't afford an attorney and can't afford to just walk away. Do I have any options?
