Wouldn’t it be great to always get paid? If everyone treated your business the same way you treated everyone else, there wouldn’t be a problem. People would willingly pay what is expected of them and business would go on as usual. Sadly, not everyone has nearly as high standards as you.
For many businesses, a policy of paying up front is standard: most people willingly exchange their money first to receive the product after: that’s true in the online and offline world. In your business, perhaps you require credit cards, Paypal, or even checks – all up front – before you hand over the product.
But some businesses – particularly service-based businesses – don’t have the same privilege. Many service based businesses, both online and offline, are usually expected to provide their services first and be paid later.
This can lead to (no surprise) “deadbeat” customers, customers who never seem to send you the money that’s owed to you. If your business uses this type of system (pay after service), here are some strategies you’ll want to use to help you decrease the number of deadbeat customers:
1.Try to uncover a way to be paid up front. This may sound simplistic but it’s largely overlooked by service-based businesses like consultants. And yet, some service-based businesses (attorneys for example) freely charge up front without any expectations to the contrary. Another way to help you get paid up front is to “productize” your services; that is, you will have an easier time asking for money up front if you package your services as a product. For example, if you’re a freelance writer who writes Search Engine Optimized content (to help websites climb the search rankings), instead of getting paid per word or per page, create a 10 page package and sell it. Your offering doesn’t change but your customer’s concept of your offering does.
2.Do your due diligence on your customer. You can be sure that customers will do a little research on you before buying your services (to make sure you’re qualified, etc.). Don’t blindly accept each job that comes your way: do some research on them first. Google your customer’s name, business name, and email address. If they have a website, try calling the phone number and doing a WHOIS search (to determine how long they’ve been operating and what their long term web-ownership project could be). Googling their address could tell you very quickly whether they simply rent a postal box or actually have a physical address. And if you don’t get paid, this kind of research can be helpful. One online consultant’s deadbeat client virtually disappeared off the face of the earth until the consultant Googled the client’s email address. He found the client’s real name and home address and was in a much better position to ask for the money.
3.Arrange an escrow service through a company like www.escrow.com or have the client pay in installments as you deliver your service in installments. That way, even if they disappear after the last installment, you’ll have most of your payment.
4.Most importantly, trust your gut. If you’ve been in business for a while you likely have built up your instincts when it comes to customers who are going to bolt before paying. Trust your instincts.
No one wants to go into business just to chase customers around. Use these 4 methods to help ensure that your business remains profitable.