Sometimes going it alone in business can be very liberating as long as you know how to handle the accounting. This isn’t simple entrepreneurship, though. You’re a specialist. You’re what many would call a solo practitioner, and while those independent contractors still have the major responsibility of finding the work themselves, you have the undoubted ability to have them walk right in your door immediately, because you have a specific need.
That makes your accounting that much more important for all the lawyers, dentists, accountants and other sole practitioners out there. Lately there’s been statistics showing that clients and customers end up late on their payments. You’ve got to keep tabs on it 24/7, and here’s how to do it —
You’re the last word on positive feedback. It’s not you’re the CEO, and you get to do write-ups for your employees when they provide lackluster service to the customer just walking in the door. If there’s a screw-up, you’re responsible for it.
Go the extra mile if you want to make sure your fees get paid on time. Remember your clients’ names, send birthday cards, build those business relationships. Not only does this constantly remind the client or customer of the fact that there’s an invoice still sitting on the dining room table, but that customer or client might actually recommend you to someone else, thereby increasing your customer flow and revenue.
This isn’t, however, the same as being ‘inflexible.’ You want to have some leeway, provided the customer or client always communicates with you. Rather, you need to start strong and lay out the payment terms before working with the customer or client, and make sure it’s clear to that individual about payment.
Additionally, putting it in writing that there are specific consequences, maybe even late fees, wouldn’t hurt. That’s not being ‘inflexible.’ That’s being understandable.
Some may have opinions about how to charge, but I say for solo practitioners, at the very least, utilize a fixed pricing structure over an hourly rate. This is why oftentimes attorneys will charge a retaining fee before even discussing representation. That guarantees payment, and there’s no wishy washiness.
It doesn’t, however, apply to every industry, for obvious reasons, as some projects vary, and a flat fee might not do a year-long contract justice for, say, a real estate contractor. Sometimes that hourly rate is a must. That doesn’t, however, mean you can’t have that initial upfront payment standardized in your fees.
Be flexible but not laid-back with your deadlines. This means set a deadline, but set a deadline that works for your customer as well. More importantly, in this case, while you want an easy deadline for your customer, don’t “give an inch” then and allow a customer to run with your “easy deadline” and think he or she can get away with going a month without paying.
In the end, you’re left without your rent payment all because you were too lenient on your fees. You’re a businessperson. Definitely act like one.
This means several things, actually — your service needs to be punctual. Your invoicing, too, needs to be on time. Why? Think of it this way: if you provide the very best service, can you imagine just how great your customer feels? Moreover, when you invoice immediately, you’re taking advantage of the fact that the customer appreciates the work done so well that they are so willing to pay immediately, all because of your professionalism.
The door swings both ways here. Expecting your clients and customers to be punctual applies to you, and more power to you if you explain that in a contract. Imagine just how much your customers might respect you for that.
Speaking of deadlines and punctuality, nothing beats technology these days when you’ve got payment convenience. Checks had their time back in the day, and now they’re like the dinosaurs.
These days we’ve got PayPal and other services out there, allowing you to even use your smartphone like a credit card swiper. How’s that for convenience?
Did I mention that you’re solely in charge of the accounting? This means you’ve got to watch the budget. Watch your spending. Keep an eye on what you know may be coming in revenue, what to expect in your revenue, and how long it will take to show up in your PayPal or bank account.
Why? It’s easier collecting your payments from clients when you’re not desperate for it. Moreover, sending all your regular invoices in two weeks before any major bills are due is a must. It ensures you pay all your expenses on time, even if a client or customer’s a little late in paying their fee.
I already mentioned that you can list your expectations right on paper. It makes it legal. This is especially true when faced with the possibility of late payments and a customer seems to fall off the map. How do you get paid? How do you get your money?
Because you have the policy in writing, consulting with your qualified business lawyer will do the job, especially when it gives you a reason to charge late fees, accounting for your own legal expense.
If I sound like I’m telling you to be dictators, sticking it to your customers like soldiers with guns, I apologize. You need to be strict with your deadlines and payments, yes, but oftentimes you might have the real dedicated long-term clients out there providing your readily available and continual source of income.
Those clients are the ones to really keep. Those are the ones to really cater to. In many ways, you want to be really flexible with them, allowing maybe one payment to go late from time to time. Stuff does happen. You do, however, need to draw the line somewhere. It’s a dance. Set a deadline, and if they have a problem and communicate it to you well, you then set another deadline and stick to it. Be fair, but ironclad about it.
Lastly, after all is said and done, it’s safe to say that sometimes you might come across that customer or client who won’t pay a dime in a million years, even after your administrative assistant has made a thousand calls, trying to reach the person.
It’s easy to give up. Here’s the simple word of advice: don’t.
Talk to any skilled business lawyer about it, and they’ll know the game well — every fee counts, even the ones you have to walk through fire to get to. You are, after all, a specialist. Act like one, pursue every fee you’ve earned until you get it, even by legal means if you have to.
In the end, you gain respect. You gain reputation. More importantly, if you follow these ten tips, you gain the most important reward any business could ever acquire — success.
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Matt Faustman is the CEO at UpCounsel. You can follow his business insights on Twitter at @upcounsel.