By now you all know some things about me. I was an accountant, controller, CFO, whatever you want to call it. And I was born in Wyoming, and summered there after we moved away. So it is not remarkable that I love the work of western artist Charles M. Russell.
In my office at work I had a copy of his painting: “Meat’s not meat till it’s in the pan”
The hero of the painting has effectively shot his dinner, yet can’t figure out how to 
retrieve it. When someone would come in to my office boasting about a great sale they had made, I would smile and point to the painting. Ah….
This painting is a great metaphor for collecting money. You may have done the work. You may have invoiced for it. But it’s not money till you’ve collected it.
The ability to collect money effectively starts early in the process, just like the cowboy needed to think further than shooting the Big Horn sheep. Even though these steps may seem obvious, let’s see if as a business person you are actually doing them:
- Be clear at the beginning how much the service or product will cost, as well as the payment terms.
- Hint: have a contract, agreement, letter, purchase order, even an email, detailing who does what, and what it will cost. It gets things clear.
- Consider a retainer or “up front” payment, especially if you are creating a product (ie: website, tax return, design work, etc.)
- Why? It establishes a commitment on both sides, helps your cash flow, and may cover your basic cost if the client doesn’t like the end product.
- Invoice promptly.
- Hint: You can assume that the client will take the time between when the service was delivered and they received the invoice, at least double it, and then maybe pay you.
- Have a professional looking invoice
- Hint: If you aren’t serious about the money, they won’t be either. Don’t just use the canned invoice form without adding your logo, changing the font, sprucing it up a bit. Make it look official and professional.
- Have a specific due date on the invoice
- Why? People are used to due dates. You find them on your bundled TV/Phone bill, credit cards, etc. The old convention of terms isn’t really acknowledged, especially if your clients aren’t large companies with an Accounts Payable department.
- Hint: They will pay sooner because you are clear, direct and on top of it.
- Collect the money!
Yes, I stopped there…for now. This is part one. If you follow the steps above more people will pay you on time, really!
So what if they don’t pay you on time…what then? Well that’s what “Meat’s not meat till it’s in the pan…Part Two” will be about…
The “what to do then” piece deserves it’s own article. It’s not hard, but it does tend to trigger more emotion. We’ll suss it out next time. Meanwhile, get these steps spruced up and incorporated into your business!