We are a small business. We invoice once a month, for services performed in the previous month. Our payment terms are “due on receipt.” Some clients pay accordingly. Others have tended to lump us into the “net-30” category based (my ass-u-mption) on the terms they receive from other vendors. A few others appear to have a “squeaky wheel” folder, aka don’t pay until someone is bugging them repeatedly to pay.
Years ago I contemplated putting up a web site called “theydontpay.com” that would serve as a sort of small business Dun & Bradstreet service. Small business owners could post their experiences of companies with a bad record of not paying, so other small companies could check out a potential client in advance. Back in those days, we had a few big names you would think would be an asset to the client list. But in reality, they had a high P.I.T.A. score often based on refusal to pay normal invoices. The concept was very similar to another social media site I recently discovered, RottenNeighbor.com. (I could have some fun there!)
Since I was too busy to do that, and am wary in general of putting out stink eye for all the world to see (I prefer Aloha), I decided instead to offer positive incentives. I’ve been having fun, but have to report that it has only made the good clients better and not the “bad” clients better. The first month was a 10% discount to the first payment received. We accept and encourage electronic payments so the first payment was delivered in less than 20 minutes by a nonprofit client, NAWBO. I reported that in my next monthly mailing.
The next time I offered a free $10 iTunes Gift Card to anyone who left a comment on our blog. This was to also help our clients get more comfortable leaving blog comments and hey, do any of you not love getting more blog comments?
Guess what? Only one person played. Meredith of HereComesTheGuide.com was stoked, and I extended it some because she actually left two comments! I sent her a 25 gift card that also donates 10% to AIDS relief in Africa. (I hope that link survives outside of my browser cookie settings…)
This month, I am offering a more generic BareFeetShop/Amazon.com $10 gift certificate and link love to all those who tell me about a blog they read and why. (And I even encouraged them to get staff involved.) Early congrats to Andy at Packet Analytics who replied in less than 15 minutes! I’ll compile the results here in a few weeks.
Wish me luck. I’d sure like to find out what the tipping point is to get old invoices paid. (You know who you are, though I wonder if you read our blog. Please contact me privately to tell me about your sweet spots.) I am all ears to the rest of you who have fun ways to help clients pay on time and feel so good about it they’ll want to do it over and over again.
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{ 5 comments… read them below or add one }
Most of my clients are encouraged to pay in advance and so they do – or they pay after the first session. I also have subscriptions for repeat advertisers which is something I am liking because it is auto payment and billing – which means less invoicing and tracking time for me.
Thanks for the Rotten Neighbor link – it will fit right in on my blog.
PS I enjoy your blog and videos!
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This is a really good topic Rox. Recently my studio has adopted a “no more net 30 accounts” rule! Any new clients will need to pay at the time the job is completed (cash, cc, check) or make a deposit if appropriate depending on the job. I simply tell the new client we are not setup to do net 30 accounts, we accept cc, checks, cash for payment, which will be due when the job is completed, this has helped us to keep accounting costs down which in turn helps to keep our pricing down – so it’s a win-win!!! And it saves paper!!! Then I smile, look directly in their eyes and nod my head once – like “that’s that”. (When I say “and it saves paper” it always makes me smile because I feel like I’m helping to save the planet and I feel good about what I’m saying!) What I’m actually feeling at the time is the most important thing to me – because it seems the client always picks up on my attitude, no matter what words I use. And now when I get paid I take care of the money “malama pono” – I don’t just throw it in the tray like it was a scrap piece of paper. I hang on to it for a minute and mark the invoice as paid – so the client sees that I view it as valuable.
I don’t act like it’s a big deal not to offer net 30 (anymore) – because in my mind it IS a win-win! The local grocery store doesn’t do net 30 when I buy groceries :)))) So there is really no reason why I should. Every business has either a checking account or cc.
In the past I had self-esteem problems about what our services were worth and I felt awkward about talking about payment terms (and the client would pick-up on my strange energy). I think because I would avoid being direct, the client took that as “it’s not important to me that I get paid, so whenever I get paid is ok”.
For the last six months has been the worst when it comes to clients not paying and I’m owning up to the part that I played in that.
This has been a huge learning experience (and personal growth).
Mahalo for the topic Rox!
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These are both great ideas (get deposits and due upon receipt). I was really impressed with your comment about the energy discrepancies Shawn. I think it is difficult to see how being nice morphs into being taken advantage of, until the practice is established. “We cannot change anything until we accept it. Condemnation does not liberate, it oppresses.” Carl Jung
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Describes me to a” tee” Shawn.Great comment!!After 4 years i got taken.Wingstop!!!!!!!!!!!!A resturant based out of Dallas.A little over 2000$.I cant tell you how mad i am!He was there during most of the repairs being made.It makes me not want to trust anyone anymore.
I agree totally with these comments. I own my own cleaning business and the huge comapny I have a contract with owns several apartment complexes. The contract says net 30 but they pay like net 50- 60. I am a small business and have bills and employees too I feel so discouraged like I should close my doors. It seems I just can’t get caught up from being behind because they want to stick to their net 30 so to speak. This new opt program they deveopled is suppose to get contractors paid with 15 days not happening yet. Any suggestions write back. and when I call or email to check the status of payment they get snippy.