We've all been there before: 30 days pass, then 60 days, then 90 days...or - worse still - your client flat out refuses to pay an invoice. When you, as Account Manager, are the jam-in-the-sandwich between your client and your Finance Department, what do you do?
There will be a reason why your client is not paying, and you will need to use every relational tool in your toolbox to find out why. It's best to start your enquiries as soon as it is obvious that payment is not forthcoming. The sooner you know what the landscape looks like, the sooner you can help to figure out a solution to the situation.
Account Managers are usually not involved in chasing late payments in the early stage of the process. Initial communication with your client will be made via your Finance Department or company accountant. An Account Manager typically gets called when Finance has either (1) been alerted to a deeper problem; or (2) has tried unsuccessfully to extract payment. The exception to this is if you are a freelancer or sole trader, and are both designer AND Account Manager, then the issue is yours to deal with right from the outset.
If you are making the first non-payment contact then the following applies:
Depending on the answers to questions #3 to #5, the process may become more complex...
It could be that your client simply does not have the cash-flow to pay you. Rather than being up-front about it, they may be embarrassed and keeping quiet, hoping you will forget about them. Maybe they are waiting for you to be the "squeaky wheel" before they will pay you.
Receiving part-payment over time is better than no payment at all. If your client is able to pay off their debt via instalments, make sure you agree to include interest (otherwise you are, effectively, acting as an interest-free bank loan to your client), and make sure you get this agreement in writing.
It is not wise to generate new work for this client until their debts are paid off. Even then, you will need to have a heart-to-heart about paying for work going forward. Taking a % deposit up-front would be one safe-guard you could put in place, and if the project has outwork costs (e.g. print, photography, media, etc), then those costs should be paid up-front in full.
Your client may have gone through a particularly difficult patch, but they traded through it. Their cash-flow is now good, but they are struggling to pay off their old debt, so you could consider "ring-fencing" that debt. This would enable you to keep trading with your client normally, and your client will agree to pay off the debt over a period of time.
Did the delivery of a project fall short of your client's expectations? Did you make a mistake in production or in the invoice details? Was quality below-par? If your client is unhappy, the situation will usually fall into one of two categories: justified objection and unjustified objection.
Did you make a mistake in either the invoice details, or the job itself? Did your invoice not match the quote they received? The best solution is to admit the mistake and then figure out what you can do to redress the issue.
It may be as easy as re-issuing a new invoice with the correct total and description; or, it may mean you have to redo the job before your client will agree to pay the invoice. There may even be the odd occasion where you will need to credit all or part of the invoice back to your client and chalk up another "learning experience".
Whatever you need to do, do it quickly and without blame-shifting. Apologise profusely, let your client know what you plan to do, and keep them informed of progress until the matter is rectified.
Firstly, remember to keep your cool. Their objection may have "unfair" written all over it, but - in their mind - they are correct, so you need to tread softly.
Talk to your client to find out why they are unhappy. Their refusal to pay an invoice may be only a small part of a larger issue. Perhaps their expectations didn't align with yours or they may even be blaming you for errors they made themselves. Maybe they have simply made a mistake in their understanding of the invoice.
As you dialogue with your client, omit emotive words from your conversation - these may inflame rather than pacify. Present the provable facts of the project, and you will find that heat starts to evaporate from the situation. It will be difficult for your client to maintain an unfounded opinion when faced with a paper-trail, records of conversations and meeting reports that indicate otherwise.
Sometimes agency and client simply won't see eye-to-eye, and invoices remain unpaid. If dialogue and tolerance hasn't worked, you may have no choice but to turn to debt-collection.
It's extremely difficult to know whether a client is going to be a good or bad debtor. Even clients with whom you have had a long history can fall on hard financial times without you being aware, and every job has the potential to go pear-shaped if you are not careful.
Here are some tips to help mitigate invoicing and payment pitfalls:
As Dr Phil concisely puts it "we teach people how to treat us". The processes we do or do not have, and the way we react to situations (such as non-payment) will help to mould our client relationships. Let's make sure that we are building strong partnerships, so that when hiccups happen (and they will), the path will be much easier to smooth out.
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