Avoiding non-paying clients
Running a business is hard enough without having to chase up payment from your clients, which can bring about many troubling financial and legal ordeals.
Dealing with owed debt can lead to profitability imbalance, negative client relation, and legal troubles that come with chasing up owed debt. This is why it is important to think about precautionary measures before doing business with just anyone.
Research the customer:
Before you enter into an agreement with a client or other businesses, make sure that you know who you’re dealing with and do some background research. There are government certified websites available to check whether a company is registered and legitimate. Find out about their history, make sure they are reliable and still in operation and look for any bad reviews from other people’s experiences with them. Pay attention to those who ask for discounts or complain that your fees are too high.
If you get the idea that the client may not pay, consider avoiding the job instead.
Have a signed contract:
Regardless of how much you trust your client, it is still a good idea to have a written contract in place so that everyone involved is on the same page and you have evidence to refer to in the case of a dispute or confusion. The contract should consist of the terms and agreements, payment schedule, preferred payment method, the exact product or service to be completed and late payment policy. This will encourage your client to make their payments on time, and will also come in handy if any legal action is required in the event that payment isn’t made.
Have a good invoicing system:
Make sure that you invoice customers quickly with professional and easy to understand statements. This helps you keep track of your customers and helps your customers understand the payment requirements. You can set payment terms and policies to ensure that you will be paid how you and your customer agreed.
Ask for deposits or instalment fees:
If you ask for a deposit and the client does not want to pay, it is an indication that they may not be not trustworthy and might not be willing to make a full payment. If the client does pay you a deposit or instalment fees but does not make a final payment, then you will not have wasted as much time and effort on this work than you would have otherwise.