When you first start a business your primary focus is on obtaining clients. You work very hard to make yourself, and your business liked and trusted. It may never occur to you that the client you worked so hard on wooing would ever stop paying their bills, and that your reputation could be at risk because of it.
But non-bill payment happens, especially to startups. If you attempt to recoup your money in a way that’s too aggressive or unprofessional it can wind up being ineffective, and damaging to your reputation. Here are five tips to help you get paid, without hurting your reputation.
1. Choose your clients carefully
The easiest way to make sure your clients pay their bills is to only accept clients that are capable of paying their bills. A simple credit application and credit check can help you get your bills paid. Including requests for contact information and other details in your credit application will prevent you from having to ask for this information at a more delicate time.
2. Keep your paperwork in order
Once you’ve agreed to work for a company it’s important to make sure that all the paperwork you create clearly spells out payment terms, including penalties for late payment. The more professional your paperwork, the easier it will be for you to collect on money owed. The Small Business Association has some helpful information for writing contracts.
3. Ask for money when it’s due
If you let several invoices slide well past their due date you run the risk of surprising and offending a company when you suddenly start asking to be paid on time. It’s much better to ask for money as soon as a bill is late.
Obviously, you don’t want to be rude or threaten legal action immediately, but you also don’t want to get too far down the road of nonpayment. New client relationships can be tricky and it’s always a little uncomfortable to bring up issues such as late payment, but it’s better to do it sooner than later.
4. Know the red flags
Many companies, especially startups, are reluctant to be aggressive when it comes to collecting on bills. As a new company you may worry that if you’re too aggressive you could lose the contract, or damage your reputation. This is a reasonable concern.
However, the sooner you can tell that a company is in trouble, the sooner you can take appropriate actions to get paid. Signs that a company is in trouble include, failure to respond to emails and phone calls, employee layoffs, sudden movement of offices, and unprofessional excuses.
5. Get professional help
Hiring a commercial collection agent is obviously a great way to get your money, but it’s also a great way to preserve your relationship with a client, and your reputation. When debtors aren’t paying bills it can be easy for business owners to lose their temper and act unreasonably themselves.
If you send threatening messages or publicly damage the debtor’s reputation, it can backfire and damage your business instead. Hiring a professional collection agency ensures that debt collection will happen in a calm, legal, and reasonable way.
As a new company your reputation is one of your most important assets. Make sure that you’re protecting your bottom line and your reputation by going after nonpayment in an effective, efficient, and professional manner.