It’s about the passion, about the freedom, and about the variety of working with many different clients. But working at home is also about the money! And because you might be a one-man or one-woman operation, each chunk of money owed to you can be very significant, especially when you’re first starting out and cash flow is problematic.
Here are five guidelines to follow when you put on your collection agent hat, particularly when you have slow-paying or no-paying clients that need a kick in the pants.
•Reduce the need for collections altogether! – By using an online service and escrowing funds prior to work starting, you’re assured that funds are available. Also consider asking for upfront payments for larger jobs. Splitting the payment up and getting money at the start can help stave off any cash flow crisis.
•Prep the client for invoicing – If you send a quick note to the client along the lines of, “I anticipate completing the job on Tuesday and will invoice then, let me know if that’s a problem,” you’re laying the groundwork for the expectation of payment.
•Invoice promptly and accurately – Don’t shoot yourself in the foot by delaying invoicing. Send invoice as soon as is reasonable and appropriate. Invoices should normally indicate “Due upon receipt” for completed work. And especially if you’re using an old invoice or template, there’s a chance to make a mistake in the billing. Don’t fall into this trap! An employer may rightly call you on the mistake and ask you to resubmit, delaying the payment. And less scrupulous employers may use your mistake as an excuse to sit on the invoice even longer.
•Establish an invoice spreadsheet – Smaller work from home operations unfortunately have to be their own accounting departments. And it’s easy to lose track of invoices, particularly if you have numerous clients with smaller totals. Make a spreadsheet indicating dates submitted, amounts, summary of work completed, and employers. Create follow-up schedules for slow-paying employers. This spreadsheet will also come in very handy for tax time.
•Kill with kindness – Only for the most egregious payment delays do you want to try to thump employers with the nasty stick or try to shame them into paying. You’re a professional, and your first collection attempts should be entirely polite. You should also keep your vocabulary in check. “Let me know the status of the outstanding invoice” is a much better phrase then “Didn’t receive payment today. What’s the deal?”
Today’s economy has definitely made slow and no payments a spreading epidemic. What have your experiences been with difficult employers? Let us know how you you were able to secure your payments.
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