Point 1: Set the stage to attract paying clients.
1. Raise your rates. Okay, so maybe this tip is a bit counterintuitive, but bear with me. You may believe you can compensate for rock-bottom rates by increased volume. But, trust me when I tell you, this strategy rarely works in the long term. Clients who truly value your services will expect to pay a fair (and sometimes premium) rate, and will be unlikely to give you trouble when it comes to making payments.
2. Have a payment policy in place. Having a payment policy tells your clients that you are professional, and helps ensure that you and your clients are on the same page right from the outset. Your policy should cover all aspects of invoicing and collections, and explicitly lay out what’s included in your rate. Specifics can include:
How often you’ll send invoices
Payment terms and penalties for late payments
Your rate structure: for instance, hourly, monthly, per-project, etc.
Payment methods you’ll accept (and won’t accept)
The process you’ll follow for late and missed payments
Point 2: Identify “unwilling” clients from the outset.
Dealing with late or missing payments can end up costing you significant time and money. So, it’s always best to potential debtors before you even engage with them.
You should avoid the following example of people.
1. Avoid bargain hunters. You know exactly the kind of client I’m talking about. This is the guy who tries to haggle you down on your rate right from the outset, who says, “You look like the perfect fit, but you’re charging 50 percent more than everyone else I’ve talked to.” Assuming you’re confident that your rates are fair, don’t let these bargain hunters get you down. If they’re unhappy with your rates now, think how unhappy they’ll be when you send your first invoice.
2. Be wary of potential clients who don’t “get” what you do. Comments like, “Well, I’ve been told we need your services, but I’m not really sure,” should be a major red flag. If they’re hesitant that they even need you, they’ll be far more likely to argue over or even avoid payments. Stick with clients who know they need you, and know that you’re the right person for the job.
3. A client refusal to sign a contract is a good sign that he’s a deadbeat client. Any reasonable client will be more than happy to sign a contract, especially one that offers standard billing terms. If a potential client seems hesitant to sign (often revealed by the lengthy period taken to sign and return it), RUN. This can be a sign that he or she is anticipating future problems and looking for loopholes.