Each month the wonderful women of NAWBO Cleveland gather to discuss a different topic. This week was about clients, money, getting paid, and methods for billing. I took notes and would like to pass this along to other small business owners. We covered more, but these were the main topics of discussion:
Through all the stories, lessons learned, and new methods for some to try, we came up with a quick checklist for handling billing and payments with clients.
- Have a contract if possible; be clear about the terms. Don’t be shy. Even when large corporations send you their contract, you should reciprocate and have them sign yours. Most important items to be covered:
- Price: hourly or lump sum.
- When payment is due.
- What items are covered by the contract.
- What items are excluded by contract and should be charged separately.
- Upon agreeing to the terms, either get paid upfront or half in advance.You may also design your own by phase (upon [terms], we expect to receive 1/3 payment, etc.)
- Try your best not to discount unless your business offers promotions or coupons, or something of that nature. It’s tempting – to help the single mom or someone who is suffering, but it should not devalue your worth.
You are worth your time. You are worth your rate. If you begin to make concessions for some people, others may hear about it and expect the same. It took years to gain your knowledge, and if the client came to you, he/she is expecting to pay for services.
Instead, offer terms to them. “I can’t offer a discount, but I am happy to set up a monthly/quarterly payment plan so that this is affordable for you.”
- Keep business money separate from personaland keep business clients separate from others. It may be tempting to “borrow” from one to another, but it will create an accounting error if you forget to counter-balance your transaction. Your funds may all go into one business account but keep a separate client ledger (even if hand written) so that you can match up services to transactions.
- If you get paid up front, earn your money as you proceed along your services. Say you are working on a long-term project and you receive half in advance. It may behoove you to have a savings account (or some separate business account) so that as you do the work, you take a portion from the lump sum account and transfer it to the permanent account once you have completed portions along the way.