This week, I’m making sure YOU get paid! 🙂 On Tuesday, we looked at some changes you can make to your contract so that you safeguard yourself against non-payment. Yesterday, I shared my favorite tools for invoicing clients. Today, it’s time to tackle the ugly: WHAT if your client doesn’t pay you? ACK – the horror!
Here are steps on collecting payment from non-paying customers:
1 – Make sure all payments are collected PRIOR to the wedding.
If you offer a day-of-the-wedding service, your contract and invoicing needs to indicate final payment BEFORE the event. The day of the event can be a little chaotic for a bride to be whipping out her checkbook. And, after the event… well… you’re certainly not a priority anymore as the couple heads off for their honeymoon in Fiji. It will become increasingly challenging to collect on invoices after the event has occurred.
If you sell a product, you need to consider how much of your work is at risk in producing that product. For example, if you sell custom stationery you will most likely be unable to re-sell any client’s canceled orders. (In my stationery business, I require 50% deposit at contract signing and 50% when production begins. Once production has begun, the client owns all of that inventory and work we’ve put into it. I don’t start any work on a job until I’ve received 100% payment.)
Make sure to time payments received with how much work you have put into servicing the wedding. For example if you are wedding planner, you want to time the invoices with the work you are doing. If you have only invoiced them for 25% of the fee and have done 75% of the work and they cancel their event, you may have a hard time collecting that 50%. (See #4 and #5.)
2 – Remind, remind, remind.
As I mentioned yesterday, the squeaky wheel gets the grease. If the client has $1000 in their bank account, they’re going to make the check out to the wedding pro that is most insistent on collecting it. Out of sight, out of mind. Trust me, the more on top you are of getting paid, the less often you’ll face any problems.
If I’m expecting payment from a client, I have a ‘3 strikes, you’re out’ policy. After sending the initial invoice, I’ll send 3 reminders. Each reminder has a due date. If the client misses the due date, we need to have a deeper discussion.
3 – Learn what the problem is and work with the client.
If the client has missed all my reminders, I get that client on the phone. I’m very sympathetic to people’s problems and I want to learn what is preventing them from paying me. This sympathy goes a long way. Ultimately, I want the client to pay me. So I need to work with them.
If the client is having financial problems, some times it is simple enough to resolve by setting up a payment plan. Maybe the $1000 bill was too hard for them to swallow in one lump sum. But, a $200/month payment over 5 months may be a little more manageable. If I can learn what the problem is with non-payment, then I can work to offer the client some solutions.
4 – If there is no response and the client owes you money…
If the client owes you money, you need to make some tough choices:
- If you are servicing them on the day of the wedding, will you not show? If they haven’t paid you to render day-of services, this is a very real consideration. Naturally, you need to let them know that if they haven’t paid you by the wedding, you won’t be showing up.
- If you do show and they have not yet paid you, you need to be at peace with the fact that you may never see that payment. I’ve heard of too many situations where a wedding pro felt bad not showing up to service the non-paying client’s wedding. This is business. You HAVE to get paid for it. And, if you still service the non-payment client, know that you may be kissing your income on this wedding goodbye.
- If they owe you money for services you already rendered or for a product they purchased, how will you pursue payment?
5 – If this leads to arbitration…
If the client owes you money, you can seek payment by taking them to court. Before going this long painful route, you’ll want to send the client a demand letter. (Check out Nolo’s guide for writing a demand letter.) The demand letter essentially tells the client, in the nicest way possible, to “pay up or we’re going to court”. Most people will want to avoid this, so it’s a fair way to warn someone about the steps you’re willing to take if they don’t pay you.
And, if this doesn’t work, you can seek legal action. Depending on the county where your business is established, you’ll have a threshold for seeking judgement in small claims court. For example, in Miami-Dade county, claims of $5000 or less must be pursued in small claims court. You’ll want to investigate this for your own county. You’ll also need to decide if this is something you want to put your energy and time into pursuing. Smaller amounts are generally not worth the time and the expense.
Has this ever happened to you? What did you do? Share with us by posting a comment below.