Not following the payment structure I described in part three of this series can cause you big problems. Customers who deviate from this will cost you a lot of money, not only in not getting paid but also in attorneys’ fees.
In your sales contract, add a binding arbitration clause. People argue this with me, but I have learned the hard way — after nearly three decades of business — not to pay the lawyers who will drag out the legal process in front of a judge. With binding arbitration, you generally go before a panel of three, often former judges, and the issue is resolved in one day (after a couple days of prep). You each present your case, and a binding decision is made. If you don’t agree, you have to pay a fee (often $200), then it’s thrown out and you start all over in front of a judge. So even if you feel you got cheated and saw only half of what you are owed, you are still ahead. Think about the time you’d spend preparing papers, the money on legal fees, time in court and jobs where you could be making money.
A few things to help you stay out of trouble: Do good work. Be nice. Document everything. Remember the three rules of a contract: 1) Get it in writing; 2) Get it in writing; and 3) Get it in writing. That said, don’t think a written contract will remove the need for trust between you and a client. A written contract is a useful tool to prevent misunderstandings. All agreements involving money or something else of value should be in writing and signed by both parties; but once the trust goes, the written contract is almost worthless.
If you have an issue with a client, don’t email them, don’t text them, try not to call them. Go see them in person. Listen to them, speak with them (keeping your voice low will help them to do the same, yours always lower than theirs) and again listen. Admit wrong when you are wrong and fix it. Don’t just say it — do it when you say you’re going to.
I like to use the example of the audio/video company with whom I was working. One of its clients owed them $30,000, which it desperately needed. Instead of sending a letter from an attorney, I advised them to talk to their client. The conversation went something like this:
A/V Company: Mrs. Smith, we have an outstanding invoice due of $30,000, is there something wrong that you are not paying us? You are usually so prompt.
Mrs. Smith: Well, yes. The touch screen you installed doesn’t have the pages on it we discussed, and one of the features doesn’t work.
A/V Company: I am so sorry and glad you brought this to my attention. We can get that taken care of by the end of the week; it is just a simple programming change. Would it be possible to pay us $29,000 now and the other $1,000 at the end of the week when we complete the change for you?
The company accomplished several things. It eased the client’s concerns; took action to rectify a mistake; took accountability; and got the much-needed cash. This is a better way to address the situation and take care of your client, alleviating any communication issues. And you must continue to build that trust. This series has come to an end; part five is up to you. You can either do nothing, continue to learn and keep challenging yourself, or get a coach or mentor you who will challenge you to grow personally and in business.
