When a business owner provides clients with a great service, they expect the same in return through prompt payment.
But freelancers and entrepreneurs often have to face late or delayed payments from clients, which is both disappointing and discouraging.
While choosing to sit and wait for that bank transfer confirmation is not ideal, constantly following up or chasing your client could jeopardise any future collaboration on projects.
This was exactly the dilemma the Emirati Mohammed Al Joohi faced when he first established Brandavia, a creative marketing agency in Abu Dhabi in 2015. He and his team worked to deliver the clients’ projects on time, however they later faced multiple issues with clients not paying on time. In some cases, the delay was over two months. As a start-up owner he did not want to hassle his clients, but at the same time the delay affected other business operations. So he had to come up with a solution.
Now any clients that he works for must pay 50 per cent of the total amount before starting the project, with the other 50 per cent payable upon completion. But what happens if clients do not approve the final work? Mohammed says in some cases clients may take a month to get back to him with their approval, ultimately delaying payment. This is where he introduced terms into his client contracts. Those that sign an agreement to work with Brandavia must agree to provide feedback on the final project outcome within three days. Any delay beyond that then incurs penalty charges of Dh100 per day. Alternatively clients have another option; if they take too long to come back the company demands the other 50 per cent of the payment upfront with any changes to the work be made later.
While Mohammed felt this was the best solution for his agency, there are other options available to start-up entrepreneurs. These include:
• Offering incentives
Giving your clients rewards or incentives to pay promptly, such as a discount, could encourage them to pay on time – as long as the discount is sizeable enough, but not so sizeable that it hinders your profitability.
• Make payments easier
Paperwork can take a long time and discourage people from processing payments on deadline. Offer your clients the option to pay online through a secured portal such as PayPal to avoid the hassle of physically handing over cheques.
• Put it in writing
Don’t stick to verbal agreements. If you are starting on a project – whether with a new or recurring client – make sure the payment terms are clear in the contract.
• Provide more than one payment option
Don’t just stick to bank transfers or cheque payments. The more payment options you provide, the less excuses your clients have not to pay.
• Invest in clients’ relationships
Before working with a client, meet for a coffee or lunch to get to know them better. Investing in that relationship goes a long way. They will learn how you work and how your company operates and you will get to know their personality more.
• Delay delivery
This is a last resort and, personally, I don’t like this option, however it is sometimes necessary. Do not start the work until you have received a down payment and once the project is done, share this with your client but do not submit/deliver it until the remaining payment is complete. You may feel awkward about this but remember a business relationship goes both ways. Serious ground rules need to be put in place to prevent clients from testing how much they can get away with.
Manar Al Hinai is an award-winning Emirati writer who manages a branding and marketing consultancy in Abu Dhabi. Twitter: @manar_alhinai.
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