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Getting
paid can be a problem for homebased business owners. Some clients may think
you're too small or not professional enough to go after them for unpaid
bills. You didn't mention whether or not you had a contract with or invoiced
this client, so let's assume you didn't have a contract but did invoice the
client in a timely manner. How do you make sure you'll be paid for your
work?
Determine
from the beginning what your payment policies will be by asking yourself
these questions:
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Will
you accept checks, credit card payments or cash only?
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Is
payment due upon completion of a project, or will you bill monthly for
ongoing work?
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Will
you offer a discount for early payment? How much? Will you require a
deposit? How much? Is it refundable, and in what situations?
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Will
you do a credit check before accepting a client?
Here
are some things I suggest you do to help ensure you get paid for the work
you do:
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Clarify
your payment policies before starting any work for them. In the case of
medical billing, where it's ongoing work, determine the volume of work
you'll be doing for each client. If it's extensive, perhaps you should
bill every week or every two weeks instead of monthly. Sometimes it's
easier for a client to pay smaller amounts than one big bill. It's also
easier on your cash flow.
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For
a business that has out-of-pocket expenses, asking a client to make a
deposit at least large enough to cover these expenses is a reasonable
business practice.
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Put
it in writing! Have a contract with your clients that spells out who's
responsible for what, how billing will be done, and the consequences of
slow or nonpayment of an invoice.
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Know
your rights. Find out what you'd have to do to collect on a bad debt by
calling your local bar association or small claims court.
Let's
say you've done all that and a client still refuses to pay you. What do you
do? First, document your efforts to collect the invoice. How many times and
when have you called? How many letters or past due invoices have you sent
and when? What was the response?
If
you're able to speak with the client (either in person or by phone), ask the
reason for nonpayment. Are they dissatisfied with your work? Are they having
cash-flow problems? Could they make a partial payment and arrangements for
the balance?
If
you get no response from your efforts to contact the client, send a
certified letter requesting a return receipt reiterating that the amount is
past due and that previous attempts to reach the client have been
unsuccessful. Most courts require this type of attempt before you can go
forward with legal action.
If
the letter isn't signed for and gets returned to you, or is received but no
payment or contact is made, your next step is to take legal action either in
small claims court (if the amount is less than the limit for small claims
court in your area, which you can find by contacting your local district
court office) or by contacting a collection agency or lawyer. Having a
signed contract and a log of your attempts to collect will help your case.
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