Debt Collections: Show Give me the money!

As a freelancer, working in the world of I.T., you may find yourself, depending on your chosen specialism or client base, working for FREE. There are two real types of working for free – neither is a good idea!

The first occurs when you take pity on, or don’t feel like charging, a friend/colleague/associate (bad idea though, take it from me) because it only took you an hour or so to do the job they needed doing, or maybe you already had the part they needed lying around….only a fool works for free in this way in my opinion.

The second, however, is not as easy for you to control, and occurs when you complete a job and don’t get paid. This is unacceptable, and can be avoided in the most part by taking some preliminary action to encourage your customers to pay you, and then taking further action early on when they don’t. Hopefully, by being as proactive as possible, you can avoid the headache and hassle of doing a ‘Christmas Carol’ (my children need shoes/clothes/food/a new PSP, what are you playing at, pay up immediately?!!’) or a ‘Goodfellas’ (‘Give me my money or the garden gnome/cat/car tyres/backup tapes are history!!’) Follow my ‘Give me the money!’ guide to improve your chances of getting paid!

Find out as much as you can about your legal position for all of the items detailed below, as, remember the Internet and this web page cover many countries, and laws and systems in each of the countries differ.

Give Me the Money! Guide

1. Always know what you are going to charge and when you expect to be paid for the job at hand. If you have to buy parts for a job, do you want cash on delivery/completion of the job? This often depends on the size of the job as well. Small jobs, such as say those up to a couple of hundred pounds/dollars may be paid for on the day, using either cash or a cheque. If you expect a job to cost more than a few pounds/dollars, but less than a couple of hundred, maybe warn your client that you expect to be paid, enabling them to prepare your payment, or put off your work until they can afford it. (No working for free, remember?). If you are doing a large job for a client that involves you purchasing parts or equipment, perhaps you can agree with them that they will pay so much up front to cover this, especially if you are not cash-rich at the time. Remember to ensure you don’t look like you’re operating out of your bedroom though (even if you are), and that you might need to invest some of your own money, or even pay for all of the kit up front.
2. Make it as easy as possible to pay. Do you take credit or debit cards? If so, does the customer have to come to you, or do you have mobile use of a credit/debit card machine? Can they pay over the telephone? Can you take payment over the Internet (e.g. PayPal?). All of these things can mean that you are able to offer as many avenues as possible to enable your customer to pay for their goods and services, and again, mean you won’t be working for FREE! Entrepreneur.com on Collecting Payments, www.paypal.com
3. Offer incentives for paying early. It’s a win/win situation then. Do you offer a discount if a customer pays on the day? You should. You should also offer a discount if they pay with cash, and if they pay early (e.g. within 7/14/21 days).