So, more than a year later, I find this blog again. Wrote it, lost it.
It's pathetic, really.
However, getting paid is still an issue, so back I go to the theme.
Once we caught ourselves up after the tech wreck, and got our receivables and payables more or less back in order, we had to deal with a new reality. We were going to have to spend more time on the process of getting paid.
We implemented a number of changes.
We now use our bookkeeper much more heavily, tracking payables and making sure we know immediately when a client tips over the two-month period.
Our client agreements are now contracts that involve such elements as payment up front, payment within 30 days, invoicing at the beginning of the month for payment before the next month's work begins, and so on -- whatever seems appropriate. (Previously we had simply relied on our invoices, which had stated that our terms were payment within 30 days.) We ask our clients to sign these new agreements, verbally outlining our payment policies so that there is never a danger of misunderstanding.
For the first time, we include options in our agreements. We had operated under the assumption that it was cleaner and safer not to own stock in the companies we represented. Our rationale for rejecting options previously was that since exercising options and buying or selling stock in our client companies would involve insider trading reports as well as careful attention to grey periods, reporting dates, and other corporate events, not to mention the possibility of conflicts of interest, it all seemed a bit dicey. But it is a reasonably painless way for public companies to provide a little gravy to their suppliers, so we decided to try it out.
We send regular monthly tallies for late payers, so that everyone is aware of how much is outstanding on a regular basis.
We down tools once a client hits the third month without payment. This has become a mantra. It limits our liability to two months'payment, which we feel is tolerable.
We now send our invoices electronically, and use that as a reason to phone to make sure our invoices have been received, a friendly voice acting as a reminder.
We have sensitized ourselves to warning signals right from the start of an engagement. It is not our job to act as a client's bank, and if a client is asking for this service, even indirectly, it should set off alarms. This includes comments like, "We're just waiting for financing, but we need to get started now," or "You'll give us bargain rates, right? We don't have much money," or "Why don't we pay you a percentage each dime the stock goes up?"
We now tactfully refuse prospective clients if it looks like it's going to be hard to get paid.
Fortunately, our current client base is pretty reliable, but the tech wreck and its aftermath forced us to reevaluate our role and value for clients, and this turned out to be a good thing. We provide a necessary service, and the more we value it ourselves the more our clients will value it. Insisting on getting paid promptly is part of basic self-respect.