Nonpayment must be one of the oldest problems that a contractor can face. With so many payment options available now, this can be even harder to navigate. Checks and PayPal take days to clear, direct transfers can take up to a week to process, and even cash can be fraudulent. With so many options, it makes it hard to get yourself ahead of the loopholes that within each payment method.
Being cheated out of money after putting in days of hard work can be incredibly frustrating and has often led to unpredictable behavior by contractors which they later regret.
So, how can you make sure that clients pay for your services fully and on time?
The first rule to this is to make sure that all of your communications are friendly, consistent, and firm. Speak to your client in a way that makes them feel valued and respected. At the same time, set boundaries for yourself. For example, be clear from the beginning about the date at which payment is due, and what happens if a late-payment is made.
Make sure you also use a range of contact strategies like calls to home, calls to their cell phone, sending emails, and sending letters. At the end of this process, if the client still has not paid, politely inform them that you will be taking legal action. When doing so, be very clear about the next steps that will be taken if payment is still not paid (like when you will be contacting a lawyer or a debt collection service).
While it’s not a pleasant conversation to have, keep your tone polite and respectful. Finding a generic letter online and using that is always a great way to ensure that your emotions are not running the show when it comes to writing these letters.
Remember, regardless of the situation, your words can and (likely) will be used against you if that client decides to write about their experience with you on the internet.
To help avoid such situations in the first place you can:
Establish a payment timeline: make sure you provide your clients with a timeline of payments, and details of late-fees and penalties. Better yet, go over this information with them and get them to sign it before you start work.
OFFER FINANCING OPTIONS: partnering up with a service, like Smart Home PRO, can make the cost of projects easier to manage for clients. Using monthly repayments as an option for your work makes paying much easier for your clients. With your clients, you can also take time to set up the costs as automatic payments so that they’ll be paying without having to think about it. Using this route you no longer have to worry about nonpayment customers.
Putting everything on the table right away not only sets payment expectations for your client, but also builds the trust necessary for a strong, positive customer relationship, Waldorf said. Before diving into a project, make sure that your client is fully aware of projected costs, and ensure that you take time to answer any questions upfront.
Having this clarity from the beginning will help strengthen customers' trust and commitment to paying the full amount. If anything changes along the way, alert your customers as soon as possible so there aren't any surprises.
- Posted July 2, 2018 by Alicia King