Prevention is Better than Cure (Part 1 – Prevention)
You worked damn hard to close this lead, went above and beyond to meet or surpass expectations, and when you raised the invoice, the client refuses to pay.
The reasons that the client gives you for not paying can vary from anything like work not being satisfactory to not having enough funds with him to settle the accounts.
Have you been in such a situation? If you have been in any business, the chances of you going through this monetary and emotional turmoil are high.
What all can you do to prevent such situations for arising?
- Prospect hard – Business is all about alignment. The end goal is to have a seat at the table. That is, you respect the client’s business and vice versa, and you want to assist the client in achieving success. There is mutual respect and both ends are working towards that aim. More often than not, we fall for the low-lying fruit – the monthly retainer or the fixed cost and completely discard the alignment for the same.
- Filter your funnel in a smart way – Sales is all about funnels and you need to create to concentrate on the quality, not the quantity (as a general rule of thumb, but exceptions do exist!). The touchpoints that you have should clearly communicate your intentions and convey that you mean business and are not a pushover without obviously intimidating the other party.
- Dealing with Companies/Partnerships/Proprietorships/Individuals – Depending on the type, take GSTIN, PAN (personal for individuals), check the Director/Partner etc. information on the MCA website. Check these individual’s social media presence. Do not go ahead till you are 100% convinced.
- Face to Face meetings are good – Though most of Gen X/Y/Z believe in remote work and everything works via skype, but there is a difference between having a gig-based freelancer mentality and actually running a company. The earlier you understand this, the better it is.
- Prepare a proper agreement – Ensure everything is crystal clear in the agreement, your deliverables, the payment schedule including the terms of payment, late charges, penalties and arbitration clause.
- Agreement and Contracts are slightly different – Contract is enforceable in court (generally). You need to ensure that both parties have signed the agreement. Save an e-copy or file the hard copy of the same in a safe place. You might need it in case things do not go as planned.
These are just some general tips you can apply to your business to reduce the occurrences of morons messing up your business. Please keep in mind this does not 100% guarantee that you will not be taken for a ride. In the end, be smart and know when you are being taken for a ride. Most of it will come from experience and remember once bitten, twice shy.
In this part, we discussed how to prevent your company and yourself being taken for a ride, the next part we discuss how to diagnose that you have been infected with the disease (that is someone who should not have but has succeeded in breaking the barrier). Stay tuned!