Lesson One- Happiness is…. Getting Paid
Let’s start off by admitting that as much as we love what we do, as small business owners, we do this to make money.
Repeat after me: I AM NOT A CHARITY
Let’s also admit that we have clients who have not really gotten on board with this concept and who Just. Don’t. pay. Us.
The reasons clients give are varied and creative. Some that I’ve heard are:
I thought your fees included taxes or shipping or materials etc.
I’ll pay you as soon as I’ve gotten paid by my client
It ended up being over my budget
This isn’t what I expected
It’s not really what I was hoping for
We canceled the project so we can’t use your work now
I have a different recollection of our conversation
And my personal favourite…. I thought it would be free
(Seriously, the cojones that it takes to say that with a straight face…just breathtaking.)
Some clients won’t even respond, they just become ghosts who never respond to your letters, your phone calls or texts.
How do you deal with it?
You can’t just let it go. This is your business that you shed blood, sweat and tears for (ok, at least sweat and tears). This is your business that pays for hockey equipment and ballet classes for your kids and pays your mortgage. You have a responsibility to your family, to your employees and above all, to yourself, to get paid for your work.
The solution is not to pout or plead or blast the non-paying [insert colourful word of your choice here] on social media, the solution is to, before you start work, have a contract in place.
It helps to think of a contract as a story with two characters- your business and your client. The clauses of the contract tell the story of what happens when you and your client work together. But a good contract needs its author to think like GRRM of Game of Thrones™ fame. You have to ask yourself- what is the most horrible thing that could happen- and then write that down.
I know that as entrepreneurs, we hate to think about anything that isn’t positive. We don’t want to think about clients stiffing us but these things do happen, especially when money is at stake. The proactive and intentional approach is to build getting your money into your contract.
Getting only a verbal agreement or a handshake and then hoping for the best is for amateurs, And you, my friend, are a professional with bills to pay.
So….what do we need in a contract to make sure you get paid?
Andrea’s top three clauses to get you your money
- Scope of Work Clause. A very clear, very specific description of exactly what you are going to provide to the client. The more specific you are, the less of a chance you will hear- “This isn’t what I expected” and more of a chance you’ll hear those money chimes.
- Fees and Payment Clause. This clause is at the very heart of getting paid because it’s where you tell your client how much and when to pay you. Again, the more specific, the better. You need to let clients know how you charge- by the hour or a set fee for a specific deliverable? How often will you bill? Do you require a deposit or full payment upfront? When are your invoices due? What are the consequences (and there should always be consequences) for non-payment?
- Cancellation or Termination Clause. When things go wrong and your client doesn’t want to work with you anymore, crying and holding on to their pant leg doesn’t work….or so I’ve been told. Instead, a cancellation clause will tell your client if and when they can cancel, what responsibilties they continue to have and for how long after sending their cancellation notice.
And because I know at this point you’re wondering what to write, here’s a sample of one that you can copy and put right into your contracts:
The Client may cancel this agreement for any reason by providing a minimum of [____] days notice in writing to [name of your business]. (Note to my reader: the number of days you put here will depend on your cash flow and billing cycle but 30 days is common) All fees paid up to and including the date the notice of cancellation is received by [name of your business] are non-refundable and will not be returned to the Client. The Client will also remain obligated to pay all pre-approved expenses incurred by [your business name] on the Client’s behalf up to and including the [3rd, 4th, 5th etc.] day after the notice of cancellation is provided.
The first time you ask a client to sign a contract may be nervewracking. But remember, while you might be new to this entrepreneurship thing, you definitely are not new to the service or product you are providing.
By insisting on a signed agreement that protects your ability to get paid, you signal to the world that you take your business seriously. When you take yourself seriously, guess what? Your clients take you seriously and serious people get paid.
Did you find this helpful? Be a great friend and share the knowledge.
Disclaimer: This crash course is a resource for educational and informational purposes only and does not take the place of hiring a lawyer. Participating in this email crash course does not create a solicitor-client relationship between you and the creator of The Secure Startup™ (that’s me!). If you have a specific legal issue you need help with, you should hire a lawyer (also me or you know, other lawyers) or purchase The Secure Startup™ when it becomes available or, preferably, both.