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5 Tips for Preventing and Dealing with Non-Paying Clients

Contributed by: The SBA

Late or non-paying clients are a hard fact of business. Small businesses in particular are vulnerable because they lack the accounting and legal resources to deal with these customers, with collections falling squarely on the shoulders of the business owner. Likewise, smaller firms and sole proprietors eager to acquire new clients often rely on loosely structured quotes, estimates, statements of work and other non-binding agreements to secure new business.

Here are some approaches that your small business can take to mitigate the risk of dealing with late or non-payment, as well as some options for collecting that debt.

Develop a Payment Policy and Discuss It with Your Client

Part-payment policies by which a client pays a portion of your fee up front are common in service-based businesses – particularly where you need to make an upfront investment in inventory or equipment to get the job done. Try to secure 50 percent of your fee up front if you can. You should also agree on invoicing terms in advance.

If your client is a consumer, be aggressive with your final payment terms – 7-10 days upon receipt of invoice is normal. For business clients (B2B), the industry standard these days is 30 days. Many companies can deliver within 15 days – particularly  smaller, more agile business clients – so don’t be afraid to ask and negotiate.

 

Consider a Late Payment Fee

A late-payment fee is basically an incentive to pay on time. You will need to build language around this into a contract or payment policy before doing any work. Late fees are typically a percentage of the total bill (usually 6-10 percent per year, although you should check this with a lawyer). Any interest charged on late payments might also be subject to state laws, which limit the amount of interest that can be charged.

Put a Collections Plan in Place

There are many reasons why a client won’t pay, but if you have delivered services or products in good faith and the client has not complained about your business, these soft measures can help you deal with any non-payment:

  • Re-issue past due bills – As soon as your first bill is past due, reach out to the client and ask them if the bill was received and is in process. You may need to re-bill as a gentle reminder. You can also send a monthly statement with the outstanding amount owed (with interest, if your policies or contract stipulate a late fee) clearly labeled as past due.
  • Get to know your client’s accounts department – If payment is still not forthcoming, seek out the accounts payable department (call the client front desk or operator). Check whether the invoice was received and if you can help in any way. All the while, maintain a steady and friendly relationship. Don’t hang up until you get a verbal agreement confirming when the payment will be made. Follow-up over e-mail confirming the conversation and maintain a paper trail.  If this fails, bring it to the attention of a VP or President of the company.
  • Don’t apologize – Stick to your guns and never apologize for chasing payment.
  • Offer a payment plan – You may want to offer a payment plan, especially if you have a good relationship with the client and they are having cash flow problems.

If All Else Fails – Threaten Legal Action and Be Ready to Report the Client

If your “soft” approach has failed and the invoice runs past due more than 60 days, you may need to threaten legal action and/or report the client to the Better Business Bureau. Alternate options include working with an attorney to issue a demand payment letter or filing with a small claims court if the arrears is under $3,000. The latter is a cheaper option since a lawyer need not be involved.

If Your Client Files for Bankruptcy

If you suspect bankruptcy is in the cards – look out for a lack of communication from senior employees, adverse industry conditions, etc. – consult an attorney and always file a proof of claim. Once a bankruptcy petition has been filed, the debtor has the benefit of an automatic stay. This prevents you from taking any further action to collect the debt unless, or until, the bankruptcy court decides to the contrary.

 

U.S. Small Business Administration
The SBA is an independent federal agency that works to assist and protect the interests of American small businesses. The agency delivers the answers, support and resources small businesses need to start-up, grow and succeed through district offices throughout the U.S. and a network of resource partners including SCORE.  SBA.gov

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The Seven Deadly Sins Of Business Blogging And How To Avoid Them

Written By: Fasturtle

The importance of having a blog for your small business cannot be stressed enough. However, building and maintaining that blog is not always easy, it takes time, creativity and a basic knowledge of search engine optimization. As more businesses begin to understand their value, the popularity of blogs are increasing. While blogs that are well written and executed can create a great deal of success, it is very easy to slip into poor habits and make common mistakes when blogging.

To prevent you from making some of these blogging mistakes here are the 7 deadly sins of business blogging, and how to avoid them:

  • Not Blogging Regularly

The Sin: One of the most challenging aspects of blogging is posting on a regular basis. Running out of time, ideas or creative content can cause you to push blog writing onto the back burner. Consistently posting is crucial to improve the viewership of your blog. Regular posting can also greatly impact your search engine optimization efforts.

The Fix: Set a posting schedule for your blog and stick to it. Brainstorm topics and write posts ahead of time to avoid a time crunch. If one person can no longer manage the blog alone, consider using a team of employees to write posts or invite guest bloggers to develop articles.

  •  Bad Writing

The Sin: Unclear writing, poor grammar, bad spelling; all of these factors make posts difficult to read and understand. Avoid overly complicated and technical jargon if the topic can be explained in a more simple way. If the post cannot be easily scanned and understood, it will be ignored.

The Fix: Before posting be sure you have spell checked, fact checked and re-read your writing. It never hurts to have a second pair of eyes look over your work to catch errors you may have missed or identify unclear ideas.

  • Publishing Too Much “Sales” Content

The Sin: The content published is focused only around sales pitches and promotional content. Your customers are interested in your products, but they want to know how these products will improve their daily lives. Limiting content to only products and company news will not establish your place as an expert within your industry.

The Fix: When writing blog posts avoid only thinking about what your company needs to promote. Instead, focus on information a customer may want to know. Offer informational, customer-centric thought articles. Content that offers value to your customers is much more likely to be read than a repurposed sales pitch.

  • Covering too Many Topics

The Sin: Readers visit your blog to learn about your products and services, not to get a recap of last night’s game, your weekend activities or your opinion on the new french fries at the restaurant down the street. So unless you are a sports broadcaster or a food critic, leave these topics out.

The Fix: Stick to what you are good at. Write about topics related to your business or industry. It’s ok to be creative with topic selection, but be sure there is some value to your customers and relationship to your business.

  • Failing to Optimize

The Sin: One of the primary reasons for a business to manage a blog on their site is for search engine optimization efforts. Failing to utilize keywords in the title and content negates one of the main purposes of the blog – to be found by search engines and improve rankings.

The Fix: Optimize all content with researched keywords. Provide links to any products you may have discussed so readers don’t have to search for it.

*Note: Keyword stuffing in a blog is just as much of a sin in blogging as not optimizing. Overusing keywords in an attempt to be ranked higher can backfire and search engines will penalize the site.

  • Being Hard to Find

The Sin: It’s impossible for your readers to find the information on your blog useful if they cannot find it.

 The Fix: Display the blog link prominently on the company website. Utilize social media to send out notifications of updated content. Share the link to your blog in newsletters, email signatures and other marketing material.

  • Expecting to be an Overnight Success

The Sin: Establishing readers and moving up in search engine rankings takes time. When you start off you may feel like you are writing for no one. You cannot expect immediate returns, however if you write quality content on a consistent basis your efforts will pay off and you will increase both readership and search engine rankings.

The Fix: Don’t get discouraged after three weeks and give up. Set monthly, attainable goals to help you track your progress. Invest at least one year to your blogging efforts, and make sure your blog is interesting to read and easy to find.

Avoiding these sins is an important first step in making your blog a success. Remember, blogging isn’t a sprint, it’s a marathon, long term dedication and effort is required to meet your goals.

 

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