How to deal with non-payers
Non-payment can cause serious cash flow problems for any small business. Unfortunately it’s an unavoidable liability for most small businesses. Here are some quick tips to minimise the impact of non-payers.
We recommend the following:
- Require payment, or partial payment, up front for products or services. Requiring a minimum deposit is fair and minimises risk of non-payment.
- Don’t do too much business with one company (i.e. don’t put all of your eggs in one basket). Have a back-up or Plan B in case projects or products ever go wrong.
- Provide a quote or get a signed service agreement where ever possible. Both are examples of contracts which can hold your client to the liability.
- It doesn’t hurt to be honest with a client about the impact of non-payment. As a small business, reliable payment for products or services rendered is imperative for sustaining cash flow.
- Factor non-payment into your rate. It is reasonable to assume this to be no more than 2% of your total gross sales.
- Be consistent with chasing your debtors, no matter who they are.
- Be nice to people — even when chasing for payment. While it’s tempting to be aggressive and pushy towards a client when owes you money, poor negotiating only compounds the situation and can come back to bite you. Be the better person.
Remember, always keep your values and options in mind whenever you take on a new client or project.
Will it be worth it?
Developing the skills of assertiveness, negotiation, and tenacity are important when dealing with non-payment in your small business, but learning when to let go is just as crucial.