Show me the money

A good friend and entrepreneur was chatting with me on her phone, while in the post office checking her mail.

She became livid, as she realized, yet again, 3 clients haven’t paid her this month.

It’s a common theme I’m hearing a lot lately. People are slower to pull the trigger to buy and slower to pay.

A recent study found that businesses wrote off $152.5 billion in bad debt in 2007, based on IRS statistics. And delinquent debts are expected to increase in 2008 as the struggling economy leaves more people and companies strapped for cash.

You can blame it on the recession… or you can do something about it.

Recently, I’ve developed a new system for my business to get people to pay.

But before I go into it, I’d like to share my one rule: NO PAY… NO PLAY. Plain and simple, if you don’t pay your bill, you won’t get my PR services.  For a while, I would let things slide.  But no more. 

Now back to my system. The first thing I realized is that I can’t be the cool, hip, publicist and confidante to someone if I am also playing bad cop, chasing down the money.  So I outsourced it.

Here’s what my executive assistant does:

1. Sends a friendly and polite email reminder when the payment is due in 10 days. It informs the client that if not paid by the due date, all work will have to stop. She also includes information on how to make a payment online with a credit card.
2. On the due date, if payment has not been received, she sends another, more urgent reminder. She also offers ways to make payments or the option of communicating with her.
3. After 5 days with no payment, she sends another email stating that we had to stop services and a quick report of where things left off. It includes some details showing what will happen if the work stops completely.
4. After 15 days, she sends another bill, with an late payment charge.
5. In 17 days, she calls the client with the same information.
6. After 30 days, we send a cancellation of contract, with a bill for the entire amount due. (It’s worded that way in the contract).
7. Every month for 3 months we send the same notice, with added fees.
8. After 3 months, we send it to a collections agency.