If you run your own business it’s likely that at some point you’re going to come across a client who doesn’t pay you on time. So what do you do when it comes to chasing payment from them?
With Halloween approaching, you may want to think of these types of clients as the various spooky creatures you’ll encounter during the run-up to October 31st.
The vampire is a chronic late payer who always pays up eventually, but not before those unpaid invoices have sucked away your healthy cash flow.
By keeping an eye on your list of unpaid invoices, you can identify clients who frequently pay late and make sure that you chase them straight away for payment as soon as their invoice is overdue. Think of that phone call or email demanding payment as the garlic that a vampire hates; the sooner and more frequently you send it, the more likely you are to get them off your unpaid invoice list and stop them draining your cash.
This is the type of client who’s busy doing their own thing and simply forgets your bank details when it’s time to pay. So the best way to prevent this from happening is to send an invoice that includes an added jolt of electricity to spark them into life.
Make sure that you always include your bank details on your invoices or try offering a more immediate option by allowing your client to pay you online. Some online accounting systems enable you to add a payment link to your invoice email using services like GoCardless or PayPal. Your client can then just click to pay you online via their bank account or credit card.
The witch is a client that puts a short-term hex on your cash flow by paying you either late or not at all. This may be because they’ve had bad luck, but equally it may be that this is a particularly wicked witch who deliberately delays making payments to suppliers.
Even if you think the client won’t pay, it’s worth having the awkward conversation and picking up the phone to ask when they plan to pay you. If it is just a short-term issue with an otherwise good client, you could be able to maintain your relationship by offering an extension rather than enforcing late charges.
The werewolf is only half man, so this type of client will inevitably only pay you half of your invoice (if they pay anything at all)! But this isn’t because they’re being purposely destructive – it could be because something tragic has happened to them.
For example, a client may have a big deal fall through and have dozens of other pressing bills to pay before they can get to yours. In these cases, demanding immediate payment or issuing late fees is unlikely to be effective, as they simply can’t afford to pay you in full yet. Instead, consider arranging some kind of payment plan with these clients, where they pay in instalments. That way, your cash flow won’t be as badly affected because you’ll be getting something back every full moon or so.
The ghost is a client that simply disappears without a trace. You try to contact them to pay but they won’t return your emails or calls and you just can’t get hold of them.
For these clients, some of whom probably had no intention of paying you in the first place, you’ll have to make a choice. You could hire a professional collection agency, or for smaller debts, pursue your client through the small claims court (both of which could be time consuming and end up costing you money). Or you can cut your losses and write off the invoice, before putting that client on your blacklist.