How to Handle Late Payments as an Entrepreneur
One of the most overlooked aspects of entrepreneurship is payment. Specifically, the processing and receiving of said payments. Part of the Catch 22 of running a small business is working with mid-size to large clients whose payment processing apparatus are not small business-friendly. Initial payments are usually small/non-existent, it can take 30-90 days to receive payment and if there are issues they are a bear to fix. Many entrepreneurs work hard to do dope work and deliver great service but if they aren't cash-rich, or have a ton of credit, they can easily be hamstrung by payment processing. Here's how you can help mitigate the damage:
- Discuss Payment Upfront. At the outset of each new client acquisition/campaign, discuss the payment process so you know what to expect BEFORE all the work is done. It's easier to deal with a Net 30, 60, or 90 company when you know the policy upfront. Plus, you may be able to negotiate.
- Leverage the Client Work. If the contract requires an initial outlay beyond your capacity, look into increasing your credit limit or borrowing from your bank. The contract in hand gives banks greater faith in your ability to pay back the loan or satisfy the debt.
- Have Patience. Even when you know the check is coming, it's difficult being cool, calm and collected until it arrives, but you must. Primarily because, if you spend too much time focusing on “old money” it's hard to procure “new money.”
- Follow Up. Turn invoices in on time, send them to the proper parties, and be mindful of contractual obligations that may be roadblocks to final/complete payment (mandatory social posts, final artwork, etc.). If something is late on their end, call/email to check in.
In the world of small business and entrepreneurship, you are guaranteed to experience “payment snafus” at some point or another. One of the hardest things for entrepreneurs to do when they happen is weather the storm. When your livelihood depends on what you bring in, it's easy for your highs/lows to match your company's fortunes. Rest assured, you’re not alone. Hopefully, this advice will help you avoid more of them and navigate the ones you do have better.