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You can’t get your time back if your client can’t pay – so what’s your plan?
Creating customised courses for your corporate clients is a relatively long term process and can mean you have invested a significant number of hours in taking a brief, designing and delivering pilots (with a group in a room or virtually) before the final roll out and payments. If you are relying on those payments to cover work you have already done, you are going to be in a difficult situation is the client cancels, defers, or worse still goes bankrupt when you have already done all the work.
1. Use staged payments in your contract
Make sure you put key stages into your contract of terms of business with your client and link them to staged payments. You can then submit your invoices in small and more regular amounts. Make sure you keep an eye on our credit control. If you are using KoffeeKlatch terms of business you have the right to stop working until the payment is received. While it is not wise to down tools the minute payment is late, it does give you an opportunity to check-in and start a proper credit control process.
2. Protect your time and money
You can’t ever get back the time you spent working on a client project. Dropping down or delaying your commitment if the earlier stage is not yet paid for can give you the opportunity to work for someone else you can pay you – or work on that all-important pipeline.
We are only beginning to see the impact of furloughing employees (who may not work) on how quickly businesses process payments and how our larger clients will pay us.
Where you stand in their payment scheme will depend not only on your client’s cash position but also on how high priority your project is. Projects that help build a new income stream, switch to home working, or engage virtual teams, need delivering quickly and you may have more credit control leverage than if you are delivering for the longer term.
3. Document extended credit arrangements
If you decide to carry on working and accept slower payment, make sure you set up a proper agreement on what is to be paid when. Be clear about what will happen if the plan is not kept to. If you are a KoffeeKlatch customer all you need to do is to reissue your Booking form to match the new payment arrangement. Make sure you get them signed off. Remember the person you will be talking to in a month may be different from the person you are talking to today. They won’t be bothering to properly record the arrangement you just made.
4. Automate collecting payments on payment plans.
The simplest way to automate collecting staged payments is to use GoCardless or PayPal. If your client does not have the authority to set up direct debits even on their own corporate credit card then they probably don’t have the authority to ensure you get paid. You will need to find out who does. They may be unreachable at the moment but it is always good to know.
Automate your invoicing chasing. Depending on what software you use, you can set automated emails and control what words are in them. If all else fails, make diary entries. Remember to start chasing for payments 7 days before the promised payment date. It is no use waiting until it is overdue. Start with I just wanted to check I am on the next payment run as agreed.
5. Clear contracts can help protect your time and money
Clear contracts that set out what will happen if a client can not or will not pay you can save a lot of confusion. You can always decide to do more for your client than you are contracted to do, but rarely less. It is really important for you to have clear terms and a route to stopping work if your client stops paying. It is equally important to have a ‘resilience buddy’ set up to deliver for your client if you are unable to work for an extended period of time due to health problems.
There is no easy answer
There is no easy solution to the problems we face today. We are all walking on a tightrope – trying to make enough money to pay the bills, trying not to injury our valued clients, and needing to square this impossible circle. Many of us have reduced capacity as our kids are home or we need to keep an eye on elderly parents.
It is vital to find solid ground for cashflow as soon as possible. Many micropreneurs are not going to get much out of the government’s schemes as we are either too new or too unprofitable. We are all moving from a Business to Business economy to a Human to Human one and it is not going to be easy to find our way.