How to Get Paid and Collect Money You’re Owed

Sometimes doing the job is the easy part. Those of us who often work on assignment or contract know that for a select few engagements, it’s actually getting paid by your employer that’s the most difficult part of the equation.

For anyone who faces the prospect of a deadbeat account or payee, these tips should help refill your coffers with a minimum of pain.

1) Understand the risks from the start – Before you accept an engagement, weigh how difficult you think it will be to get paid, or if there’s a risk that your employer won’t pay you at all. This can set your expectations for the post-assignment “getting your money” dance, and, more importantly, help you set an appropriate rate for the work. The bigger the risk, the more you should charge.

2) Set the terms from the beginning – Will you be paid when you complete the work? Or 90 days later? Payment terms should be set out in writing and you should ask your contact what’s realistic about getting a check. Many payment terms are never really honored.

3) Invoice as soon as possible – Many accounts payable departments pay invoices in the order received, no matter what the terms of your arrangement are. Can you submit an invoice at the same time as the work is completed? Can you invoice in advance? Depending on your relationship with the contact and the company, you may be able to trim weeks off your turnaround by simply sending in your bill early.

4) Check-in regularly – Whenever you create a new invoice, make it a habit to check on old invoices too. Is something lingering in your “to be paid” file that shouldn’t be there? Eighty percent of the time, in my experience, this is due to an invoice being lost or not being routed to the right department. Check in with your contact or the A/P department and ask (nicely) if your invoice was received and when you can expect a check. If they ask you to resend it, do so immediately. Checking up on invoices on a schedule of twice a month is a good policy.

5) Escalate your concerns – Chances are the person who contracted with you is actually powerless to get a check cut. His boss may not be. If you feel like you’re getting the runaround, make the jump from your contact to his supervisor. The more senior the manager is, the more likely he will be to not want to waste his time hearing from contractors who haven’t been paid. A well-timed call to the president of the company can often get results in just a couple of days.

6) Withhold work until the money comes – This likely needs to be part of your contract, but if you feel like there’s a strong risk that you won’t get your money, simply make your deal that you don’t send the finished product until you get paid for it. There are many variations on this arrangement: A quarter of the payment up front before you start work, a quarter at a certain milestone, and half on completion, for example. Also, another good trick is to simply not accept more work until you’re paid in full for the last job.

7) Threaten small claims court if you must – Eventually, things can get really bad and you have to bring out the heavy guns. In California, you can now collect up to $7,500 in a single small claims court case, but be warned: This path will be time-consuming, and there’s no guarantee you’ll even receive your payment in the end. Still, filing a small legal claim is not difficult, is inexpensive if you do it yourself, and the very fact that you filed the claim – or simply threaten to – can often bring results. Don’t expect to get much more work from the account, though.

8) Call a debt collector – This should be your method of absolute last resort. Debt collectors are expensive (expect to fork over 50% of any money recovered) and rarely get results. Typically all they will do is make a few calls to the other party and put a black mark on their credit report, with the promise of removing it if the bill is paid. A collector could get you paid in the end, but it probably won’t. What it will do, needless to say, is utterly ruin your relationship with that party, so only resort to a debt collection service if you’ve exhausted every other avenue.

Have you had trouble with an account paying up? What did you finally do to get paid?

About Christopher Null

Christopher Null is the editor of the Intuit Small Business Blog. A 20-year veteran of technology and business journalism, he runs the custom publishing company Null Media. He also writes daily about wine and spirits at Drinkhacker and covers the latest movies at Film Racket.
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2 comments
Stamps
Stamps

Remember: Don't feel guilty about collecting what you're owed. You didn't fail to keep your word. The debtor did and you have every right to collect.

Gil Zeimer
Gil Zeimer

Chris: Great article and terrific advice! After I was burned a few times by clients refusing to pay, all of my estimates now clearly ask for a 50% up-front retainer BEFORE I begin a project with new clients and enough legal jargon to make it stick.

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