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Tuesday, August 23, 2011

How To Push For Cash When You're In The Service Business

One of the well-known cons to owning a service business is that your business depends on your work in order to receive money. It can be a burden sometimes, the business and your clients are depending on your expertise. So most times, service business owners find themselves doing labor, with a promise to be paid.

But what about the smaller bills you have? The ones that you wouldn't mind getting paid while you continue to work?

You don't work, you don't get paid. 

While this may not be necessarily a bad thing; particularly when you have clients you're fond of and can build good working relationships with, it still can prove to be difficult at times. Especially when you have picky, hard-to-satisfy, disgruntled, I-want-it-NOW-or-I'll-tell-you-how-bad-of-a-person-you-are type of clients.

What Do You Do?

Payment Plan. If you want to cash in quickly, offering a payment option that allows a client to pay you in several installments as the project continues, may be your best bet. Get them paying while you work; especially if it is a big ticket item.

Deposit Option. A small deposit never hurt anyone. The key is to keep it small silly, don't try to gorge people. When I started my first business, I was in the business of getting funding for small businesses. Here I was, a business banker fresh off the bank market and the banking industry had yet capsized and taken the turn that it has now. I could find anybody any kind of money: $5000 or $250,000. I had relationships with bankers, middle men, SBA agents...you name it. But getting the funding packets together was no easy matter. I had to find a way to have people pay me for the amount of hours I was putting in. Deposits helped tremendously.

Automatic Payment. A small business client of mine argued with me incessantly about this point, until he finally tried it. Since then, his cash receipts have been sailing smoothly. He was having a hard time collecting payments from clients, and his business model was such that he did work every month, on a consistent basis, and had to collect payment each month. If you have to work with clients for extended periods of time, on a monthly or quarterly basis, find a way to have an automatic payment plan set up. All it takes is a credit card number, a planned date and amount, and money into your bank account.

Establish Project Phases. Helping your client understand, can get you paid even faster. If you will be working on a project that takes a couple of months or more, set time-frames for completion of certain phases within the project. This way, the client sees the project moving forward. You could then incorporate a payment schedule with each phase.

Meet Deadlines. None of this would be possible if you weren't meeting your deadlines. No one wants to pay you if you don't deliver on a promise. If you want to push for cash sooner, find some method or  project software that will help you meet your deadlines.

More Meetings. Communication is key to anything in life. Let's say you were unable to meet a deadline or complete a project phase, a meeting or conversation with your client could make he or she feel better about this. Meetings also make you look like you're working. Don't get me wrong, the key is to actually work. But when you're constantly in touch with a client, going over the project phase, giving your recommendations, giving them visuals, you could actually get paid even if you've made a mistake or two.

Anything else I could add to this list?

Cheryl Isaac is a business strategist and entrepreneur who has been in love with startups and their idiosyncrasies for years. She is a former investment and small business banker who believes in making business personal, an author, international business contributor to Forbes, and the founder of StartupBizTalk. You can find her here on Twitter and Facebook. 

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