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5 Things to Consider When Invoicing Questionable Customers

2/12/2017

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I'm a small business owner in the form of consulting and marketing. So I do a lot of invoicing and most of what I do is prepaid services. My model is a bit different than most, but like all of you, I still invoice for everything and still run into invoicing concerns...every single month.

Here are five things I think all of us should consider when invoicing our client base. Some are trouble signs to watch for and others just make good sense, but these five are helpful tips. Likewise, they are universal to just about any small business and maybe by being aware of these you can avoid wasting time on a customer who is never going to end up buying your services or avoid losing revenue to the client who received your service or product, but refuses to pay.

That said, here are the tips...

Get to know your customer but don't be a fool...don't give them the benefit of the doubt or consider them necessarily to be your friend...they are not. If you're unable to reach your customer, don't proceed with the sale. If they say they are going to pay and then don't respond to the invoice or the next five emails you send them, write them off because they are gone. They aren't going to follow through on their part of the agreement. If it's for prepaid services, then you can at least be glad you didn't give away any service for free...but there is still a loss in the wasted time of landing the client and negotiating price, info, etc. Nothing is free.

Send invoices directly to your main client contact. This helps to ensure more timely payment and gives you a known contact in the organization to go to if the invoice doesn't get paid. It's hard for the person on the other side of the service to rip you off if you already have a rapport going with you. It's like flushing a dead fish that has a name...it's really hard to do. Once it has a name, you can't just flush it, you have to bury it. It's an analogy, but you get the idea.

Keep saying they'll pay it tomorrow. Obviously, this client is either stringing you along for free information or simply doesn't have the money to pay and likely never will. Cut your losses and move on. Especially if this is for prepaid services. And yes, you still have losses there. If you've spent two hours negotiating an agreement, 20 minutes creating an invoice, and another couple of hours or more trying to get a response or payment from a no-show, then your hourly rate is very bad...even if they do finally end up paying. Run fast the other way.

Multiple attempts to pay with different payment methods. Beware of this as it may be an indication of fraudulent activity. They may be trying to pay off an account they don't have the authority to pay from or with stolen credit cards. Don't do business with this individual.

Always include terms of service, refund-ability and expected timeframe for payment on the invoice. By stating “due upon receipt”, “non-refundable”, and detailed information about the service to be provided, you can often avoid disputes or even the question or thought of a dispute because you provide this information on the invoice. And this can be especially helpful if you are invoicing up front for a service.

Summary

Most customers are good customers. Paying customers are great customers. But those potential clients that string you along and never pay or respond or seem to waste a lot of your time without committing are not worth it. They can eventually lead to you losing money on their business or the potential of getting their business. Hopefully these tips and signs will help you avoid a few of those types of customers along the way. Take advice from one who has learned the hard way and is still learning - move on before too much frustration sets in.

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    Brad Egeland


    Named the "#1 Provider of Project Management Content in the World," Brad Egeland has over 25 years of professional IT experience as a developer, manager, project manager, cybersecurity enthusiast, consultant and author.  He has written more than 8,000 expert online articles, eBooks, white papers and video articles for clients worldwide.  If you want Brad to write for your site, contact him. Want your content on this blog and promoted? Contact him. Looking for advice/menoring? Contact him.

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