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INCOME - PART 1 Client Not Paying: Whose Fault Is That? Look At How You Manage Finances ... November 13, 2013  By Paul StrikwerdaVoice Actor Take a look in the mirror when it comes to finances. As a freelancer, you are responsible for how you run your business. If you’ve done everything right and your client still isn’t paying, remember this: It’s not your fault, but it is your problem. "Doing everything right” means being on top of your finances. To you, that might be a given. That’s because you are a pro. However, you’d be surprised how many freelancers don’t keep track of how much goes out and how much is coming in. They’re simply not that interested in money. Yes, they’d like to get paid, but that’s not the reason why they do what they do. Every year, wonderful, sweet, talented, creative, intelligent and trusting people go bankrupt because their finances are a mess. Not being on top of your finances can lead to embarrassing situations. CARELESS MISTAKES One colleague got mad at a non-paying customer and wrote a rather firm email. In response, the client told him they were still waiting for the invoice that was never sent. Another colleague got all worked up because he thought he’d be paid within a month. Before he contacted the client, he looked at the contract he had signed. It said he’d be paid within 90 days. "What’s the big deal?” says one of my voice over friends. "One client owes me $250 and another $300. I’m not losing any sleep over these small amounts. It’s just money, anyway.” The last time I heard from him, he was selling some of his equipment on eBay. Small amounts do add up, and apparently, quite a few clients had taken advantage of his happy-go-lucky attitude. So, before you moan and groan about your deadbeat clients, think about what you can do to decrease the chance that you’ll be taken advantage of. MANAGING YOUR MONEY Now, we all have our strengths and weaknesses. I’m pretty good with words, but numbers do not thrill me. They never have. My wife on the other hand, is a great bookkeeper. She’s efficient and organized and that’s why she’s my Chief Financial Officer. When a client needs a gentle reminder, she usually takes care of it. That way, I don’t have to be the enforcer and potentially sour a relationship with a late-paying customer. You cannot manage what you don’t measure. Should you decide to be your own CFO, then you must choose a system suited to your business that clearly shows your income and expenses. Services such as FreshBooks, ZoHoBooks or Invoicera are meant to make accounting and invoicing less intimidating. Secondly, you have to develop the discipline to keep your records up to date. Reserve one day a week to do the books. That way you’ll know exactly where you stand. TERMS & CONDITIONS With an accounting system in place, you need to figure out how you’d like to get paid and when. The only way you can be sure you get your money, is to require payment up front. That sounds great in theory, but not every client is going to say yes to that. Unless you have a unique, rock solid position in the market place, or your customer is desperate to hire you, you don’t have a lot of leverage to get paid before handing over the goods. Second best is the 50-50 system. Ask for half of your fee as a deposit, and for the other half when the job is done. Once the invoice is paid in full, you release your work. Not a day earlier. If the client wants proof before paying the remainder of the balance, simply send a sample of the completed project. If the client insists on paying after the fact, you must decide how quickly you want your money: net 7, net 14, net 30. GET IT IN WRITING Some clients will ask you to sign a contract with different terms. Let’s say company X reserves the right to pay you after 90 days and your policy is net 30. Try to meet in the middle and get to net 60. Whatever you agree upon, always put things in writing and have the client sign on the dotted line or confirm via email. A verbal agreement only carries weight if you can prove it in court. That usually means that witnesses need to be present when you shake hands. Otherwise you might end up in a costly he-said-she-said situation. INCENTIVES WORK, TOO Even with a written agreement in place, there’s no absolute guarantee that you’ll be paid on time. That’s where incentives come in. You have two options to motivate your client: the carrot or the stick. You can either offer a discount for early payment in full, or institute a penalty for those who pay late. If you decide to take 10% off for good behavior, I would raise rates by 10% before instituting that policy. In general, I’m all for reinforcing desired behavior. If a client has been systematically ignoring your requests to be paid, a late fee might not make a huge impression. EASY DOES IT And finally, remove all obstacles and possible excuses clients may come up with to not pay your bill. Make it easy for them to send you money. Sometimes it means educating your clients. For instance, I require international customers to use PayPal. One of my clients was hesitant because she thought she’d have to sign up for that service. Once I told her membership was optional, the client asked me to send a money request. Thirty minutes later, I got paid. FIND RIGHT PERSON Quite often, the person who hired you is not in charge of payments. Always ask to whom you should send your invoice and deal with that person directly. You don’t want to hear that the department that processes payments never received your invoice. Whenever you send the finished product, always ask the client to confirm receipt. That way they cannot claim they never got it. If your rate includes a limited number of retakes or corrections, be explicit about it. You don’t want to end up recording more versions every time a copywriter has a new idea, and not get paid until everyone is satisfied. See Part 2: 9 Ways to Collect and Protect ----------------- ABOUT PAUL Paul Strikwerda is a 25-year veteran of the voice over industry whose Nethervoice service features German and Dutch voice overs, translation and evaluation services. Born in Holland, he has worked for Dutch national and international radio, the BBC and American Public Radio. Although 90% of his work is in English, Strikwerda also records in Dutch, German and French. Clients include Novartis, Johnson & Johnson, and the Discovery Channel. He also publishes an informative and entertaining blog, Double Dutch. Email: paul@nethervoice.com Web: www.nethervoice.comDouble Dutch Blog: www.nethervoice.com/nethervoice |
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