Thursday, November 08, 2007

Handling the slow-pay client

Deep, cleansing breaths. Visualize a beach. You know the routine.

Freelance professionals, for the most part, like to have corporate clients. Even a small corporation, unlike an individual client, can generate a fair amount of repeat business if they like your work. The downside of being a tiny little vendor to a corporation is that you’re at the bottom of the pile when it’s time for them to pay their bills. Payroll comes first. Then the suppliers of their raw materials. The bank comes next. Then the landlord. Then the utilities, UPS, and FedEx. And finally all the little guys—including you. If the company runs into a cash flow crunch, no matter how loudly you squeak, you may not be greased. At least not right away.

So, your net 30 invoice has not been paid after 45 days. Time to panic? Time to call the lawyer?

Too soon by far for that. Herewith the hard-won advice I gave someone on the Freelance mailing list the other day:

Don’t make it personal. I’ve been in the position of ordering goods, in good faith, on behalf of my employer and then being the person in the middle when the invoice I submitted wasn’t paid. All I could do was confront the accounts payable person and push for payment. I couldn’t cut the check myself. When your client contact, the person who assigned you the job, says that she’s done all she can, chances are that’s true. She cannot personally cut you a check, so don’t make her feel worse than she already does about your slow payment.

Call the company switchboard (not your client contact but the company she works for or whatever company is ultimately responsible for payment). Ask to speak with accounts payable.

Pay attention to what happens next. If the operator or receptionist or whatever offers to take a message or asks you who you are and when your invoice was mailed, then that’s the person who has been given the dirty job of fending off vendors. If that happens, make a dated note of what she says and thank her for her time. Get what information you can, but remain calm and polite. It’s not her fault.

If she says, “let me put you through to their voice mail” without even checking to see if the person is at their desk, that means you’re not the only one standing in line for payment.

Whether you next are speaking to a person or a voice mailbox, calmly introduce yourself, provide the invoice date, invoice number, invoice amount, due date, and the terms included in your agreement or printed on the invoice (you do have those, don’t you?); and ask when you can expect a check to go out.

If you’re speaking to a person, the words you hear next are particularly critical. Write them down exactly as they come out of the person’s mouth.

If they say they already mailed a check, get the check number, check date, address they mailed it to, and date mailed. Write it all down.

If they say they have cut a check and it will go out on X, verify the check number, the check date, the address they plan to mail it to, and the date they plan to mail it.

If they say they will be cutting checks on X, say that you will call back on X to get the check number and mailing details.

If they say they usually pay on time but right now they’re running 60 days (or 90 days), tell them you would like a letter promising payment by date certain and acknowledging that they will be paying the finance charges in accordance with the terms in your agreement.

Throughout, remain calm and businesslike. Nobody likes to be a late payer, but sometimes cash flow sucks. The person handling accounts payable is stuck in an unenviable position, and you want to make it as easy as possible for that person to be truthful. That means no threats, no emotional outbursts, just calm inquiry and a cheerful thank you for the update at the end of the call.

That’s why you call AP and calmly, politely, collect information on when to expect payment. Then give the information you collected to your lawyer if the money doesn’t come through on the promised date.


Katharine O'Moore-Klopf said...

Wise words, my friend.

Ruth E. Thaler-Carter said...

Assuming that the check-cutting person/dept. has your correct mailing address may seem like a no-brainer, but it's worth double-checking if a payment is late from a usually reliable client. Someone at one of my long-time client companies did something to the accounting software that resulted in my very old address being reinstated as my current one. A check sent to the that address had been returned as undeliverable, and no one in accounting apparently thought to notify my contact person (or actually read my invoice). Stupid stuff happens.

If a payment is slow in arriving and someone promises to take care of it, ask for overnight delivery. It can happen, especially if whoever is responsible for the delay feels at all guilty about it.

Ruth T-C,