We always promise ourselves, “That will not be me. I have reserves and I will never work without getting paid.”
Late payments from clients may not start out as clear cases where it’s easy to know your work should stop. It usually starts with a little slip here and an understandable problem there. It can happen with a relatively solid business relationship.
We demonstrate our flexibility and understanding, dip into reserves and stretch a bit. And then stretch again. “It will be better next month” we are told.
The dark days of no payment come when we have burned through our reserves, we are stretched out to the limit all our cash in receivables now, our own personal bills are due, we think we can pick up a check today, and then comes the news; “Sorry, [person’s name here] is out on vacation, can you wait until Monday?” It’s not really a question, it’s a statement. Payment is not happening today. Worse, Monday happens to be after the end of the month, AFTER all of your personal bills are due.
Or maybe this scenario; you actually get the check and you deposit it, just in time to process your own bills at the end of the month. Then, after your own payments have gone out, you get an e-mail alert from your bank; the client’s check was returned due to Non Sufficient Funds. Your bank account is now seriously negative AND racking up bank fees.
That is when it feels as though you’re looking into the abyss. Utter despair about how to get through the severe cash crunch.
You can always tell the difference between an employee and a true business person or contractor, because an employee of a company seems to think the problem is solved as soon as you have a check in your hand. A business person or contractor knows it takes a few days to clear the check and then process funds into your personal account (always keep your business separate from your personal life).
The really twisted part about late payments from clients are the controlling and manipulative types: the people who want you to believe you are the jerk, the ass, the unprofessional one, unreasonable for expecting payment in full and on time. Amazing isn’t it? You do your part and payment is still a problem. Keep a clear head and recognize, when someone twists the story around like this, s/he is feeling cornered and defensive without many options and they are trying to shift their accountability back to you.
And while all this distraction is happening, we are not developing future clients, future engagements. We may not even be doing our current job well.
Dear readers, I have stared into the abyss of no payment a couple of times this year. What I realized is, even though it appears to be complete engine-lock, we are forced to find ways to make it work, to keep going regardless of damage inflicted. A good night of sleep helps to lift the darkness and bring clarity in the morning. We plot a course and move forward.
Staring into the abyss of no cash also gives us resolve to change the way we manage client relationshps and never let it happen again.