As I emphasized in my last post – and I talk about this quite a bit – you shouldn’t have very many people late, flaking out, or not paying.
If you’ve got more than just a handful of these errant peeps, that means you have some improvements you can make in your business: (probably) your branding, marketing, messaging, pricing, and pay cycle.
Perhaps some other things too, but those are the first lines of investigation I’d pursue, if I were mentoring you.
But this post is going to go off the premise that the non-payer is a rare event. Because even if they are rare, how we handle these people is so important!
Wait – how do you know how many late or non-paying people we have? You should be accurate about this – don’t just go off your gut feeling.
So to that end I’d suggest running an A/R aging report, for starters. If your business is small enough, you’ll be tempted to just take a glance at your invoices to see who hasn’t paid. That’s a start, but that won’t tell you your historical record, and your historical record is something you need to start attending! Familiarizing yourself with A/R aging is a really great idea! For instance, my Quickbooks lets me set up a report that automatically runs, and emails itself to me!
Now if you don’t even know what A/R is, let alone A/R aging or how to run a report – don’t panic.
It’s okay. I didn’t know what that stuff was when I started my business, either.
But you should learn (or let me teach you) because to run a truly sustainable business, the more we accurately quantify our business activity – rather than just go with our gut or the vibe – the more power we have.
Still: even if you don’t know what A/R or A/R aging is, I believe I can still help you here.
Entrepreneurs with poor boundaries end up being owed money often. It’s stressful for them, of course. Inevitably they post to Facebook or socials, and complain. And then they get comments that are basically scorched earth strategy.
Scorched earth strategy like: take down the website you built them! Threaten them with a lawyer! Tell them you’re keeping their deposit and selling the artpiece to someone else! Something like that.
That’s the first place people go. Level up the aggression. That’ll do it!
But that’s worst-case scenario.
We have some options before we go there.
I am not saying we shouldn’t feel angry when people don’t pay us. Holy shit: it sucks! I mean, we put time aside, we skipped things we wanted to do, we refrained from yoga practice or going to the ballgame – and we worked for that client. We focussed on them!
We deserve to be paid.
And now they’re not paying – they’re silent, or making excuses. Yes, that sucks!
I’m not saying we shouldn’t be angry.
Non-payers or late-payers are very disruptive. They steal our time, and our energy – and they cost us money!
I had someone in 2020 who owed me a few hundred dollars (payment on a custom garment) and they kept not-paying. I set up autopay to help them, then their autopay bounced. I had to keep making contact with them. They had lots of excuses, but they didn’t hand over the cash.
I patiently, patiently, kept reminding them. It got close to me “taking a tone”, because I was pretty annoyed.
I just patiently kept reminding them.
Then one day, that final payment came in.
That wasn’t ideal, but let’s step back and review. Today I’m all paid up. This person is still my friend – they are cordial and friendly to me online (and still follow me on socials). We didn’t have to have a fight. I didn’t have to say cross words. I got close, but I stuck with patient reminders.
There’s no getting around it: it sucks they were late. They really ate up some of my time, as well as mental and emotional energy – my most valuable resources!
So – like anytime I have a customer situation go sideways – after this situation resolved I carefully reviewed my Policies. What could I do to make sure this didn’t happen again?
I realized I’d done my part in communicating. The fault was one hundred percent theirs.
More relevantly: I realize I am still going to allow payment plans (in business-speak this is called Offering Terms) –
And if I’m still going to offer terms, this means now and then, I’m going to have a person like this.
Even though this happens only about once a year, I need to regularly re-evaluate my tolerance for someone like this, someone who is late (or doesn’t pay).
I can do that.
Finally: although this very late payer doesn’t know it, I won’t work with them again. I don’t need to make an announcement, but when they come to me for something else (most my clients become repeat clients), I know that I won’t take them on again.
No matter their circumstances, it wasn’t fair for them to take well over their share of my time and financial stress.
Please remember that when your client pays, he feels better about himself.
This is another reason to hold off on scorched earth, if you can.
If someone owes you money you have the right to take a tone, to threaten lawyers, to put them on blast publicly. You really do.
But when he pays this is a good thing for both of you.
So work on your reputation, rather than having the last word or putting the errant-payer on public blast.
I ask myself about my own reputation, and I know it’s rock solid.
I also know that I’m still willing to support payment plans and as long as I’m still willing to do that – I will always, always run the risk of someone slipping on payment.
I’ve got a little more work to do (for instance, as I wrote this article I realized I had something to tweak re: my Policies) but when I check in with how it’s going (even offering terms, my average A/R)
If you’re in a spot, there’s nothing I can’t help you out of – with patience, and a careful investigation. I’m here for you, when you’re ready!
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