It’s one of the learning experiences we all have when we start out in business. How to get clients to pay for services! Amongst this group, I’m pretty sure we’ve all had similar problems. Here is how I see it:
- 1) Charge up front: if not 100%, some significant proportion (most people recommend 50%) and full payment before final stage commences.
- 2) Work proceeds: depends on payment and your schedule.
- 3) Contracts needed for work, and include additional work (tough if you don’t know what needs doing)… perhaps an addenda?
- 4) Repeat customers (those you like) get a discount for your work (but factor it into the pricing)
- 5) New customers have to do KYC in some way. Remember, it’s not just them vetting you… you also have a duty to vet them.
- 6) Evolve your pricing to reflect the true CODB (including losses), the kinds of customers you want (discounts tend to attract cheapskates, don’t do them).
- 7) Don’t discount. Find other ways to add ‘value’ for the customer. IME, the higher you charge + the fewer discounts you offer the less hassle you make for yourself which ultimately means more time to do your best work.
- 8) Include penalties for late payment of fees. This is legal and enforceable. It needn’t be much but for cheapskate any late fees are an additional incentive.
The best relationships in business are based on trust. But there are too many people out there who seek to abuse that trust. The only thing I think you can do is walk away from clients who abuse that trust.
While the law will ultimately allow you to protect yourself to some degree, it can take a very, very long time before you get to avail yourself of its provisions, and will cost a lot of money (some of which you can recover in collection). It’s best to avoid the issue upfront by KYC… so if that means your current client is a loss by walking away, then that is perhaps the only way.
If she still wants the work performed, tell her payment is expected upfront and in full. Otherwise, you have to reschedule her final work because … (You can make up an excuse that involves family to save her face…).
Have confidence in yourself. Ask your happiest customers for word of mouth referrals. Remember that you do great work! Great customers will find you!