*this post has been transcribed from an original video. You can watch the
We’ve had several questions recently about how to get paid from customers that are withholding payment or that are just not getting back to you? It's a big problem with accounts receivable and in this blog post we’ll discuss how to approach this and how to prevent it in the future.
To start it off, it's happening, we see it a lot now. Clients just aren't paying their bills. You send out the invoice, you’ve done the work or sent the product out, and they're just not paying you.
You've been very understanding, knowing all the things that go on with business owners and appreciating the situation that they're in. But at the end of the day, you are really pushing and it's not getting anywhere.
And then perhaps they've even stopped responding to you. How are you supposed to approach this? What are your next steps to actually get paid?
The number one thing to do in this scenario is remain calm.
You need to come at it from a really balanced approach.
Next, though you’ve probably been doing it already, keep the lines of communication open.
Letting them know you understand their situation and that you're willing to be flexible on payment terms,
and you do need to get paid for the work you've done or the product that you've already shipped out.
If they still aren’t responsive, it’s time to escalate your communications.
Putting some pressure on them, that if they don't get that paid, what some of the consequences might be either to your working relationship or even perhaps their overall reputation in the business community. If they continue to do this, it's going to reflect poorly on them.
If these gentle approaches don’t work, you may need to consider going the legal route.
If not for now, be informed about what that might look like. Understanding the legal route of getting paid for your invoices is a long and winding road. And you’ll definitely have to pay because you'll be paying your lawyer, but you may not have success at the end. It could end up being a further expense than you were even experiencing with the loss of the receivable.
Keep that in mind as a last resort.
The other bit that you need to take into account is really focusing on preventative care.
How are you making sure that your accounts receivable aren't too big each time you do this type of work? Does it feel very hard to ask for money up front because you might be risking a sale?
It's really important that you do this in this kind of environment, especially where people's ability to pay might be restricted. Make that really clear up front that you need a deposit and it can vary from 10-15% to 50%. Another alternative is to have payment on a delivery or before the service even starts. That would be extreme, but it’s an option.
Hopefully your accounts receivable are getting paid and you're keeping that cash flowing in. But if you're not, please comment below. Tell us your situation. I know there's lots of people that will be interested to hear how other approaches might be taken.
