Do you think your business deserves to be paid for work you’ve done?
That’s a question I like asking business owners, especially owners of IT firms.
When I ask this questions of IT owners, the typical response I get it is: Well, of course, I think I deserve to get paid.
But in all practicality, their actions show a different response.
Here’s what I mean: most businesses understand it’s fair to be paid for work they’ve done, but more often than not, IT owners are stuck spending time with a broken billing process, stuck in manual invoices and stuck waiting to be paid for work that’s already been completed.
A lot of businesses do not act like they deserved to be paid.
When I talk with IT business owners, I usually find a few things in common:
- They tend to have thousands of dollars in outstanding A/R.
- They tend to have dozens of bills that need to be collected, along with calls to be made in order to actually get paid for work they’ve already done.
- They essentially act like a collection agency.
When you own a business, you have to learn how to charge for your time and services, or you’re not going to keep your doors open very long. In the beginning, I had trouble nagging people to pay me for work I’ve done. In fact, I still struggle with it. I do a lot of things because I want to help people, and I don’t want to charge them for it.
A lot of businesses struggle with this and don’t charge people for their service. One of the main industries we made a product to help was IT companies because they had big AR problems.
Before we would go into any tools or software to help IT business owners, I always ask them: Do you believe that you deserve to get paid? But more importantly, do you believe you deserve to get paid on time? Because if you don’t believe that, then fundamentally your customers don’t believe it either.
There are so many companies that will sit and make excuses for their customers, and why they can’t pay them what’s owed.
Of course, there are exceptions to every rule but those should be exceptions. The problem comes from making every case of not getting paid on time the universal standard, instead of the exception.
Reevaluate and reset your mindset.
You need to change your mindset. Your business is providing a service. Set the expectation that you need to be paid. Managing your expectation with a customer can’t happen until you make it the standard for every billing commitment.
ConnectBooster was the tool that we developed to help IT companies, and ourselves. Originally it was really built for ourselves, and we leveraged it out to other companies because we all had the same problem. It was designed to help automate the process of getting paid, and make it easy for people to pay you.
But we couldn’t have even created ConnectBooster unless we had the mindset that we deserved to be paid for our services.
That expectation of always being paid on time starts in the sales process. Whether it’s a one-time payment, a monthly payment for an IT service or support, that agreement needs to be introduced before they sign a contract with your business.
Part of that agreement is an automatic payment. If they’re agreeing to it, you shouldn’t have to wait for a check. That should be automated.
There are ways that you can encourage your clients to sign up with autopay. You can give them a discount to incent them or surcharge them percentage if they have a late payment. Setting that expectation from the sales process, right from the get go, and then having the tools in place will prevent A/R issues.
That’s why we built ConnectBooster, to automatically know what your cash flow is.
It costs you time to be a collection agency.
If you’re spending time collecting and trying to get paid for work you’ve already done. You’re charging $100 an hour of work, and now you’re spending another hour trying to collect your money, you’re now making $50 an hour.
You’re hurting yourself. Not only that, you’re not taking care of your existing customers or getting new ones to grow your business. This also harms your employees, you can’t get them 401Ks, you can’t get them any perks to want to stay. You can’t get them raises if you don’t have any cash flow.
Without recurring revenue, predictable income, or cash flow, you’ve got a glass house. Getting paid is important. You can do all this work, all the service, but if you don’t get paid, it doesn’t matter.
In fact, you would have been better not doing the work, to begin with. Because now you’re out your time. You would have been better at home, sitting on your couch, then doing work and not getting paid.
Ask yourself this:
- Am I providing a good product and service?
- Am I delivering on what I promised to the client?
If they answer is yes, then the least your clients can do is pay you on time for the amount they agreed to.
Don’t enable them. You’re not a bank, you don’t charge interest, or have the money to be your customer’s bank. That’s not what your business is there for.
Our average client prior to using us was getting paid 48 days past due on average for their Accounts Receivables. After changing their mindset and best practice of getting paid with ConnectBooster our Average client’s A/R dropped to an average of 1.4 days. That’s over a month and a half of improvement on cash flow.
That’s a big deal.
If I were an employee for a company and I did all of my regular work and was told “I’m sorry, we can’t pay you right now because our clients didn’t pay us for our work,” that would make me justifiably angry.
If it kept happening, I wouldn’t stay there.
If we did that to our staff, constantly excusing why we couldn’t pay our employees because our customers weren’t paying us. I wouldn’t expect them to work for free. Consequently, you treat people like that, you wouldn’t have anyone working for you.
Make this the standard. Your clients are going to pay you within 30 days of seeing the invoice. You set that up beforehand, and your clients won’t struggle to pay late because of a lack of clear expectations.
Stop making excuses for your clients who won’t pay you.
One of the main features created in ConnectBooster was the online payment portal, specifically to get rid of the excuse I didn’t get that invoice, can you resend it?
They also can’t say, Oh, I was gone on vacation when we cut checks and so when I get back, I’ll cut the check. You don’t have to wait for a check with an automated payments process, which is one of the best reasons for why a business should automate this.
We say that roughly 90% of your problems come from 10% of your customers. When you let bad customers get away with treating you poorly, you reinforce you don’t think your business worth paying on time. You don’t think it’s worth it to have your customers treat you and honor their agreement.
You don’t need every customer, you just need the right ones.
Let’s put this a different way.
If your internet goes down and you’re paying for an MSP to provide service, and they take a month to come out and fix the problem, that’s not acceptable. You’d leave and switch to a better provider.
If it’s unacceptable there, it’s unacceptable for your clients not to pay service you provided. You need to handle that situation the same way you handle your clients paying you. It shouldn’t be a blind spot that’s just accepted. We can’t let this be okay since it would never apply to any other aspect of business.
You need to take the reigns back.
As a final thought, I really want to make this clear.
You’re not your client’s bank. If their payment is $1,000, $2,000 a month, and they’re always a month behind, they can go and borrow $2,000 from a bank, and be on time going forward.
Ultimately, you need to decide you deserve to get paid. Don’t let your clients walk all over you. Take the reigns back with how you take payments. Stop letting them not pay you for you’ve done.
Again, a customer missing a payment is an exception. I’m not telling you to fire every client every time they are late, but that should be rare. Set the proper expectation in the beginning and then have the right tools and process to deliver on this model. It should be easy for your customers to pay you.
You will now have a healthier business. Give your employees raises with that A/R, give them a break on healthcare costs. Give them security.