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When it comes to getting paid, we run a pretty tight ship here at Web123, but it wasn’t always beer and skittles.
A few years ago our Debtors used to always be sitting at $120,000+ outstanding. It felt like we were just being used as a bank by a lot of clients and it sucked.
Some weeks we could barely pay wages having to beg on both knees for a temporary overdraft just to scrape by (on bloodied knees and all) to pay staff. It brings tears to my eyes just thinking about it.
Meanwhile there was all this money sitting there in our clients’ accounts when it rightfully should have been in ours. They kept promising to pay next week…next week…next week.
The stress and pain became unbearable. Heart beats. Palm sweats. Nauseousness, nervousness, neurosis. Sleepless nights. Why were we torturing ourselves like this? This isn’t fun. This isn’t what I set out to do when I started my business. What am I doing so wrong? What do all the ‘other’ successful businesses do? I just wanted to crawl into a thousand holes and never come out again.
So we decided to put our foot down and take charge.
Like you, we wanted to be in control – instead of being pulled by puppet strings each week. You do all the hard work – you deserved to be paid for it. And you deserve to be paid on time.
So we got strict! Not nasty, but STRICT.
These days, we’re barely owed any more than $20,000 on any given day.
Our clients now respect that if they do business with us, it’s on our terms. I can’t tell you how liberating it is for everyone — even our clients. (Because everyone needs boundaries!)
How did we do it? Simple.
And…who said systems aren’t sexy?
How we slashed outstanding debt by over 80% in 3 months
The first thing we did was introduce a ‘Cash Upfront’ policy. This goes for our website projects and also our hosting.
If the total project cost is $5,000 or less, it’s all upfront or we don’t start work. If it’s between $5,000-$10,000 it’s two part payments; over $10,000 it’s three payments and so on. Most of our website projects come in around $3-$5k so the majority is paid upfront.
Now pick your chin up off the floor my virtuoso friend and let me explain how we get this to fly with 40-50 new website clients per month…
We’re confident when we explain the next steps. We’re confident in our product. And we’re confident we’re going to deliver results in record time. We’re so confident in fact, we even offer a 100% money-back guarantee, which gives complete peace of mind to our beloved clients. (Have we ever had to give a refund? Yep, only once just yesterday!)
Confidence is easier said than done. It takes practice.
When a client gives us the green light, we explain our process and ask for a credit card to process full payment — we don’t give our clients any other alternative options to pay. Simple.
If they’re a government client or not for profit, they’ll request an invoice, which we do send for them, but we always ask for the credit card payment first and foremost as company policy. Sometimes we’ll even crack a joke and tell them we’re going shopping for the new company helicopter and ask if that’s okay…they have a giggle and happily hand over their details.
Just keep it light. 😉
We offer 1-month, 6-months or 12-months in advance. If clients opt for monthly payments, they need to supply a credit card to process payment automatically in advance on the 1st of every month. If they want to pay by bank transfer then they can’t pay monthly, they have to pay 6 or 12 months in advance. (We don’t offer discounts for 6 or 12 months either.)
It was a nightmare trying to reconcile hundreds of $49 payments each month so again, we just got STRICT. And we stand our dig too. Occasionally we still get clients who want to pay via PayPal, cheque or Bpay each month, but we politely explain why, go over our terms again in detail and stick to our guns.
What happens when web design clients don’t pay hosting?
I’m going to preface this by saying “I’m not evil” okay? I’m really not.
We were just sick of bankrolling clients and not being able to have the entrepreneurial success I’d fought tooth and nail to have. And you shouldn’t feel guilty for introducing this exact system into your design business either because that’s exactly what I want you to do when you finish reading this blog.
If a design client doesn’t pay on time and they repeatedly ignore our past-due invoice notices, we give them 3 warnings and then we deactivate their website. And we charge a $299 reactivation fee when they get their account back up to date.
There, I said it! Do you think less of me? I hope not. It’s not personal, it’s business.
Your time is simply too precious to be chasing clients for money they rightfully owe you. You slog away ‘til all hours, give their project your all, work to unrealistic deadlines with unrealistic requests and all for what? To twiddle your thumbs for 6 months until they feel it’s convenient to pay you? Not on my watch.
You need to command the respect you deserve and in my experience, this is the best way to do it.
Command on-time payments with these email templates
I share this sort of stuff all the time with my ProPartners but I really want you to also adopt a system for getting paid on time and feel the freedom, relief and control that comes with it — you have my permission to use these as your own.
Reminder #1 for overdue hosting:
This is just a friendly reminder that your payment for Invoice <Invoice Details> is now overdue. We realise sometimes these things are easy to forget, but if you could contact us as soon as possible to arrange a payment we would really appreciate it!
Please contact our Accounts Department on <Phone Number>, or alternatively you can email <[email protected]>
Reminder #2 for overdue hosting:
We are following up on our previous email sent on <Date of 1st Invoice> regarding <Invoice Details> which was due on <Invoice Due Date>. To get your account back within terms, could you please contact our Accounts Department to advise payment details immediately?
Please note that as per our Terms & Conditions, unpaid invoices may result in the deactivation of your website, which is then subject to a $299.00 re-activation fee.
If you have any queries with this invoice please let us know, you can reach us on <Phone Number> or email <[email protected]>
IMPORTANT NOTE: During the time between #2 and #3 we will have also made 3+ phone calls, and left messages, to see if everything is okay. Sometimes there’s a family illness, their business is going through a rough patch, or they might be overseas sunning it up in Hawaii and that’s okay.
I encourage you to always have empathy, but don’t get taken for a ride.
We’re always empathetic and often stretch these terms if we feel they’re being honest and upfront with us. We’ll try to work out a payment arrangement if they’re struggling, but if they just ignore our calls, messages and emails altogether and burying their head in the sand, after 21 days…we send this email:
Reminder #3 for overdue hosting:
This email is to advise that despite our previous contact on <Dates of Emails> and <Dates of Phone Calls>, the overdue Invoice <Invoice Details> is still outstanding and your account is outside our trading terms.
As a result, if contact is not made or payment details cannot be provided by 3.00pm tomorrow <Insert Date>, we have no choice but to temporarily deactivate your website, which will then incur a $299.00 re-activation fee.
Could you please contact our Accounts Department immediately on <Phone Number> to discuss payment options?
Nine times out of ten, we’ll get a call that day and payment will be sorted on the spot. On the odd chance we don’t, we do follow through and deactivate their website and we do enforce the $299 reactivation fee 99% of the time.
Some months we never get to this stage; other months we might have one or two clients we need to deactivate, but it’s rare.
But you know what? This very system was the only way we broke free.
When you control the situation, you can do anything.
Control = confidence.
Confidence = control.
So please, go forth and conquer your payment terms! Be brave. Believe in yourself. Be confident.
Implement this system into your business for your own sanity, success and most importantly — your freedom. It’s no fun being paralysed by fear and low self-confidence, struggling to make ends meet week to week on the smell of an oily rag; it’s time to make the jump from designer to…design entrepreneur.
It sure is sweet on the other side.
But before you run off to conquer entrepreneurial bliss, do you have any questions or comments on getting paid on time? Fire away in the comments section — I’m here for you.
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