Tom Coburn, R-Oklahoma, is known for taking a “stand” on issues he cares deeply about. He never wavers. He doesn’t bend to popular appeal.
Your “stand”, is what YOU say and how YOU act in the marketplace. You declare your interpretation of the world, and are comfortable promoting your positions. In business, we must work to define our stand. Our stand governs our actions as business professionals and provides a compass for decision making. Here are some examples.
* Always disclosing to clients when you receive a referral fee for a service
* Only hiring non-smokers
* Not doing business with friends
* Requiring a deposit before beginning new work on a project
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Many service entrepreneurs and freelancers struggle with collecting the money owed to them. Past due accounts create stress, distract from your craft, and create cash flow problems. Here are four proven tips to get you paid.
1. Confirm Satisfaction. Immediately after delivering your service, and BEFORE invoicing, confirm with your client that they are satisfied with your work. In this conversation, be sure to refer back to your conditions of satisfaction .
2. Invoice Immediately. Don’t wait for the “magic” you created to wear off. Send the invoice immediately after confirming satisfaction.
3. Make the call. When the invoice becomes past due, don’t email. Call your client…..the person you worked with. Don’t call the accounts payable department. They don’t know, or care, about you. Calling sends a message that you are serious about getting paid. A phone call also sets up an immediate, two-way conversation that will allow you to uncover the reason why you have not been paid.
4. “I Need Your Help”. The four most powerful words in business are, “I need your help”. Call your client. Start the conversation with these exact words. ”Jennifer, I need your help. I have not been paid. What do you suggest?” Think about your experiences when others have asked you for help. By nature, humans respond to requests for help.
5. Mindset. Have the proper mindset when collecting past due accounts. Remember, it’s your money! It is not unprofessional to ask to be paid.
Any other tips you have on collecting past due accounts?
As entrepreneurs and freelancers, we are always thrilled to get the next deal or project. Sometimes in our eagerness, we forget one of the business basics: a well-written contract. It would be nice if we lived in a world where everyone trusted each other, and all parties performed what they promised. However, experience in business tells us otherwise.
One of the most important elements of the contract between you and your client is an arbitration clause. Simply stated, the arbitration clause sets up a streamlined and cost effective method for resolving serious contract disputes between you and your client. Without an arbitration clause, the odds are you will be engaging an attorney to settle or litigate the matter in court (trial). This is a very expensive way to go.
As service entrepreneurs, most clients we deal with have more financial resources than we do. These resources can be deployed to hire highly qualified attorneys to litigate and intimidate the small service provider. It may seem unfair and unjust, but it is the reality of the litigious marketplace we find ourselves in. The arbitration clause levels the legal playing field for you.
At my former company, Treadstone Group, in 16 years we never were a party to a lawsuit. We came close a couple of times. Each time the arbitration clause saved us from expensive courtroom drama. I can recall one instance where a client’s attorney contacted us and threatened a lawsuit. The attorney had not done his homework. When we referred him to the arbitration clause in our contract, there was dead silence on the phone. He quickly realized there wasn’t any money to be made by him. We never heard from him again.
What follows is an example of an arbitration clause. ***You should use this as a starting point only. Laws differ from state to state. Consult an attorney to tweak the language****
“You and B2Bee agree that the substantive laws of the State of Ohio, without reference to its principles of conflicts of laws, shall be applied to govern, construe and enforce all of the rights and duties of the parties arising from or relating in any way to the subject matter of this Terms of Service. YOU AGREE TO SUBMIT ALL DISPUTES ARISING OUT OF OR RELATING TO THIS TERMS OF SERVICE TO FINAL BINDING ARBITRATION IN ACCORDANCE WITH THE THEN-EXISTING COMMERCIAL RULES OF THE AMERICAN ARBITRATION ASSOCIATION, BEFORE A SINGLE ARBITRATOR SELECTED FROM THE INTERNATIONAL ARM OF THE AMERICAN ARBITRATION ASSOCIATION. Except as otherwise required by law, any cause of action or claim you may have with respect to the Service must be commenced within one (1) year after the claim or cause of action arises or such claim or cause of action is barred. The parties expressly agree that the U.N. Convention on Contracts for the International Sale of Goods shall not apply to this Terms of Service.”
Has anyone had experience with clients where legal action was taken?
Seth Godin has a good post today about selling value. He drives home the point of making offers to clients that solve a problem and deliver unusual value in the marketplace.
Unfortunately, selling value is usually not top of mind for service professionals and freelancers. Services are typically presented to a client as “# of hours times rate”. “It will take 50 hours to do this project and my billable rate is $100 per hour.” When we position our offer like this, we set ourselves up for a price war from competitors. Instead, why not stay away from selling your time and sell value instead. Here’s an example:
“For $12,000 I will deliver a sales training program. At the end of the program your sales people will be competent in three skills:
* asking customers qualifying questions
* probing for unmet needs
* writing proposals that resonate with the customer
Special thanks to the fine professionals who made this video possible. Ample handled the creative aspects while the guys at 7/79 executed the video production. Our guest actors are Shari Baum and Jeff Seamon.
Recently we came across what we consider to be a bad use of technology for service entrepreneurs. It is a case of using technology to conduct a “conversation” that needs to happen verbally, not electronically. Here’s the case.
A SaaS provider of billing software has a feature in their software that allows the service provider’s clients to login and view activity. Fine. However, the software service also allows the client to log into the system and mark an invoice as “disputed”. This is a bad business practice for the service entrepreneur on a number of levels.
First off, this practice leads the client to believe that by physically marking the invoice disputed, there is some chance that they will not need to pay the invoice. The physical act contributes to a future expectation that will need to be managed soon.
Most tragically, though, the act of allowing a client to mark an invoice “disputed”, does not address the fundamental problem. The problem being a breakdown in care for the client or a breakdown in understanding of the Conditions of Satisfaction.
This practice is no different than your customer taking a printing invoice, stamping “Disputed” on it, and mailing it back to you. Imagine how you would feel if that happened. Can you feel the animosity building?
As professionals, it is our job to set the proper expectations with clients. One of those expectations should be the method the client will use for communicating any dissatisfaction with our services. Until phones cease to exist, phone calls or in person conversations must be the method. The client relationship is too important to trust to electronic means. Voice to voice, interactive communication is key to understanding the depth of the problem and devising the solution. Voice inflection, tone, degree, and give and take cannot be deduced by a carte blanche marking of the invoice by the client.