The following article originally appeared in the March 2010 edition of The Myers Report newsletter published by the firm.


Get Paid . . . or Perish, Part I

By Jane M. Myers, Esq.


Sure it’s great to have work. These days many will admit that any work is better than no work.  But no matter how much work you produce, you’ll be out of business if you don’t get paid.  Coupled with cutting overhead, collecting receivables must be made your top priority. That’s Business Survival 101 in 2010.

FACT: As your receivables age, the chances that you’ll collect payment plummet.


Put it in Writing.

One of the most important steps you can take is to start with a clear, written agreement with your client.

At a minimum, the agreement must describe the scope of services you’ll provide, your fee, when your client is to make payment, and what happens if payment is not made. For example, consider including language that allows you to recoup costs (including attorney’s fees) that you incur to collect an unpaid bill. You can also include payment of interest on overdue amounts. Even if ultimately you decide not to insist on collecting interest on late payments, having the right to collect it can be a very useful bargaining tool – you can offer to waive interest if the client promptly pays their overdue bill.

No need to re-invent the wheel for every client transaction. Save time by creating  a template agreement that has all the necessary categories and modify it, as needed, for each new assignment.

The agreement must be signed by you and your client to show that you each agreed to the stated terms. Each of you should keep a copy. That way, expectations are clear upfront.

Don’t Procrastinate.

This applies to getting your bills out on time and following up promptly on the unpaid ones.  You can be 110% sure that delay in following up on your open invoices will make the collection process much more difficult and collection success much less likely. There is no way around it; if clients are late paying your bills you must pick up the phone and call. The “up” side of that conversation is that it gives you and your client the opportunity to re-connect and discuss any questions  they may have  about your invoice. Open dialog is key.

CAUTION:  Be very careful about continuing to work for a client who has an outstanding invoice.

Some people may be concerned that pursuing payment can have a negative effect on the client relationship.  They believe the client might be offended and not send them any more work. Well, no matter how scarce work may be in your industry, what’s the point of getting work from a client who won’t pay for it?

Did You Know You’re In The Business of Providing Interest-Free Loans?

The reality is this:  you’re extending credit to your client when you continue to work without getting paid.  If you ever do get paid, most likely you’ll just be glad to get that nasty problem behind you and be done with it.  The net effect is, by allowing a client to stretch out their payments without paying interest, you’ve provided them with an interest-free loan. Of course, every situation is different, but at the very least, when a client is slow in  paying or has stopped paying your bill, that’s  a huge red flag to step back and consider whether services should continue or be cut off.   As the saying goes, you can work and get paid, or work and not get paid – the choice is yours.

And if you choose to continue to provide services and not get paid, ask yourself…how’s that working for me??

Establish a Consistent Billing and Follow-up Process.

People want predictability – they don’t want surprises. That’s one of the reasons McDonald’s is as successful in Beijing as it is in Brooklyn.

From your client’s perspective, it’s easier for them to make arrangements for payment if your invoices are clear and arrive at regular intervals.

Don’t be a ghost in a snow storm – stand out. Don’t print your invoices on white paper.  Select a color that will get your client’s attention – the color you select can become your “brand”.

If your agreement provides for a grace period for payment and that time has passed, follow-up immediately with a friendly phone call, email, or letter reminder that payment is due.  If the invoice is more than your client might be expecting, let them know the amount  before you send the written statement.

Make it easy for clients to pay.

Say yes!

Make it as easy as possible for people to do business with you.

There’s nothing new about return envelopes, but clients appreciate receiving them. And if the return envelope has pre-paid postage, that 44 cent investment will be money well spent if it gets clients to pay more quickly.  Instead of payment by check through snail mail, consider accepting alternative forms of payment.  The retail industry has always been ahead of the curve when it comes to payment by credit card. Today, more and more service businesses are signing up with credit card services or a service such as PayPal, which can give clients multiple payment options. Clients may prefer to wire money to your bank account.

In Part II of this article, we’ll look at how to protect yourself when your client can’t pay and wants to renegotiate the original payment terms.  How do you change the terms without waiving your rights??



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Please note that this article is intended only as a general discussion of issues pertaining to the operation of a business and that it should not be taken as creating an attorney-client relationship or as legal advice with respect to any particular person, business or situation.  Circumstances and the applicable legal principles vary and you should consult with an attorney and/or other professionals regarding the facts of your particular situation.