Getting Paid By ClientsRAN ONE Development Webinars

December 2009

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What We’ll Cover Today

• Top reasons clients don‟t pay, & tips for getting clients to pay

• Also:

• How to spot a non-payer

• Qualifying prospects

• To fix fees or not to fix fees?

• When to reduce prices (and when to stand your ground)

• What value pricing really means

• Perceived indifference and how it applies to fees

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Top Reasons Clients Don’t Pay

1. They‟re not thinking about you. They‟re thinking about themselves.

• They didn‟t have the money available when they agreed on the work

• They never intended to pay the full amount

• They just want to see what they can get away with

2. You didn‟t object when they let it slip the first time

3. Invoice is confusing/doesn‟t match quote

4. Invoices not sent (or followed up) regularly

5. No contract

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How To Address These

• Discuss it clearly and openly at the start

• Get a deposit in advance

• Hold back delivery until payment comes in

• Accept as many forms of payment as possible

• If a client offers to pay, always say yes

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How To Address These

• Have payment policies & apply them to everyone.

• Designate one person to follow up on debtors –always.

• Ask in person if possible

• Have a cash reserve for refunds if necessary

• Be a good example of a good payer!

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Following Up Unpaid Amounts

• 1st step: hardly a warning – more a pleasant reminder

• Allows them to save face

• 2nd step: a demand, not a reminder.

• They are not just „confused‟ or forgetful. They are avoiding.

• 3rd step: collection activities

• Trying to get them to pay you before they pay someone else.

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Following Up Unpaid Amounts

• If they are just avoiding payment:

• Follow up every day until you get paid

• Stop all work until payment comes in

• Report them to credit agencies (make sure you notify the client before doing this)

• Collection activities (ie agencies, lawyers‟ letters, etc)

• It may make things awkward in future.

You don’t have to do any of this. You can be the good guy if you want to. (But you’ll get paid less often, and sometimes not at all.)

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Giving Rewards/Discounts/etc

• Positive incentives work better than negative ones

• Intermittent, not regular

• Give “out-of-the-blue” rewards to good payers

• Why do we always pay attention to the bad payers, and presume the good payers will continue doing so?

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When To Reduce Prices (And When To Stand Your Ground)

• Things to consider when reducing fees on request:

• Is there another option?

• Service swap

• Discount for early payment, or for less frequent, larger payments

• Reduce the services

• You may be setting a precedent.

• For this client

• For future clients referred from this client

• Do you need the client that badly?

• Are you just trying to be the „good guy‟?

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How To Spot A Non-Payer

• Asks about price early in the conversation

• Queries the quote amount

• Offers a „services swap‟ instead of paying the fee

• Little to no information available about the company

However…

• Asking for a discount isn‟t necessarily an indication of a non-payer

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Before You Qualify Prospects

• There are many options for qualifying prospects in terms of credit. First, however:

• Do you want to do business with them?

• Do you like the person/get on with them?

• Do they need your services?

• Are you looking forward to doing the work?

• Do they have the money to pay you?

• If you answer „no‟ to any of these, it makes everything more difficult. Especially payment.

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Qualifying GOOD Prospects

• Confirm client identity

• Contracting person is authorised to do so on behalf of their company

• Check their credit (a fee may be charged)

• www.graydon.co.uk

• www.icc-credit.co.uk

• www.ukdata.com

• www.marshallhamilton.com

• Get a bank reference

• Review their accounts on Companies House

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To Fix Fees Or Not To Fix Fees

• Fixed Fees

• One conversation about the fee – no surprises

• Encourages more contact with the client

• You can still track which portions of the job are profitable (and which aren‟t)

• Non-fixed fees

• Can mean higher fees

• Can also mean queries or frustrations

• Make sure they are comparing apples with apples

• Be very clear when invoicing. Show that you have been worth your fee.

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What Value Pricing Really Means

• “People don‟t value what they get for free”

• They have to respect the amount of value they receive, which means…

• …You have to respect it too.

• Make sure it‟s clearly communicated at the start

• Compare apples with apples

• Some prospects will try to get you to reduce your fee because of another, different quote

• Give away some legitimately valuable stuff (products or services)

• Make sure it‟s always in combination with a fee of some kind, or else it‟s not valued

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Perceived Indifference: What Is It?

When your customers feel that

you couldn’t care less

about them or their needs

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Survey - You Take The Test

Think about your own customer base and give yourguess, as a percentage, of those who might betempted to change to a competitor based on eachissue

Your Guess Actual

1. Convenience _______ _______

2. Relationship _______ _______

3. Miscellaneous _______ _______

4. Product/Price/Time _______ _______

5. Perceived Indifference _______ _______

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This Sounds Serious!

It is.

Perception is all there is.

- Tom Peters

The problem is rarely the problem.

THE RESPONSE TO THE PROBLEM INVARIABLY

ENDS UP BEING THE REAL PROBLEM.

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Perceived Indifference And How It Applies To Fees

• No matter how hard you work, if it isn‟t clear to the client, they may question the fee

• How to avoid this?

• Keep in touch with the client regularly – especially if delays happen

• Make invoicing very clear

• Don‟t presume that if you hear nothing, all is well

• Ask, ask, ask

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Summary

• They‟re not thinking about you. They‟re thinking about themselves.

• Discuss everything – including payment - clearly and openly at the start

• Have payment policies & apply them to everyone.

• Qualify even the good prospects

• Perceived indifference can result in non-payment. Keep in touch.

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How‟s your Professional Wellbeing?

To find out your own Professional Wellbeing score, visit www.ranone.com

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Thank You!