Operations

Pay Up Time

Posted on August 21, 2009 by - Also by this author

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Everyone is wondering the same thing: Who is holding all the money? Whether you believe it is Bill Gates, affiliates farming jobs to you, or the Federal Reserve, everyone is asking, where is all the money?

With corporate clients and affiliate networks stretching you out, and even friends who farm work between companies, it seems that no one is paying their bills on time. While one company might be collecting for a ride today, it is farming the order out and keeping the cash in favor of paying later.

Why is this happening? Because cash flow has become the name of the game for survival in the worst recession since the Great Depression. Companies need cash coming in the door every day to meet such basic expenses as payroll, insurance, fuel, rent, or mortgage payments.

Because no one seems certain when their clients or affiliates are going to pay anymore, it is not surprising that companies are looking for others to do the work today in hopes of a payment down the road. Most operators figure some money is better than no money even if you have to wait 90 days to be paid for the work. The fact is doing so is slowly killing many operators who simply can’t wait to get paid and end up slipping under while waiting for late payments.

Getting Paid

There is always a fear in calling upon someone that owes you money. That simple phone call asking for money may sour the client to a point that the client may not use you again because you have shaken them down and placed them in the embarrassing position of committing to a payment timeline.

It is simply a risk you must take because without the money you can’t pay your own bills. And let’s face it, we simply cannot and should not work for free. As unpleasant as it may be, when clients don't pay their bills, you must at least attempt to collect.

Whether it is a regular client or an affiliate client, all services rendered must be collected and how you go about collecting it may differ. You may have to walk on eggs shells — or break some eggs, depending on the situation — to get your money, but you must make the effort.

This begins with having established terms with the client from the inception of the business relationship. Terms must be defined as Net-10 days, Net-30 days, or whatever arrangement you make, but there must be some agreement of time frame to be paid. Once the terms of the agreement are broken, you are completely justified in contacting the client to demand payment.

Collecting From an Affiliate

Certainly collecting from an affiliate puts you in an awkward position. It is a lot like calling upon a family relative and asking to borrow money. No one likes to do it, but it simply must be done. Many of the big networks ask for and expect Net 60.

This allows them to bill their client for the work done, receive payment, and send you the money for your service. When collecting from affiliates, a common statement is that money has not been collected.

This should be an irrelevant issue. You can't call the phone company, the power company, or your fuel supplier and tell them you can't pay your bill because your client has not paid you. The bottom line is, they placed the order, you delivered the service, and now you need to be paid.

One way to guarantee payment is to require a “backup credit card” and have a specific arrangement that if any invoice becomes older than the terms agreed upon, the credit card is charged. A written agreement should be signed at the time you begin conducting business. It avoids all phone calls and collection efforts and should be considered “standard policy.” This is the best way to make sure that you are not left holding the bag.

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