Nobody Works in this Town Without a Retainer

SOB FacultyPractice DevelopmentLeave a Comment

Chasing clients for money was the biggest waste of my time. I got so tired of it that I decided I was not going to work for anyone without a retainer.

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It was another day that I was running my open invoices report in QuickBooks to see who owed me money. It seemed like it was the same people on that report time and time again. There I was reviewing the report and trying to decide who would get another e-mail and who it was time to call. The thought occurred to me that I would much rather be looking at my P&L, projections or even actually DOING the work these people hired me to do instead of looking into when I could get paid. It also occurred to me that it was funny how responsive these same clients were when they were counting on an e-mail from me with a report or some information they needed, but when it came to the e-mails with my invoices attached I felt like I was standing in the middle of the Sahara Desert.

Why?

If the client wants the work done right away, why shouldn’t they be willing to pay right away? I lost a client and a good friend years back over this. After sending seriously past due invoices week after week and getting no response I decided to put other work ahead of his. I had taken some documents home to work on for him. I figured when he called wondering about the work, I would once again ask him about my balance and maybe then he would realize that I needed him to take my invoices more seriously. Clearly he was not taking them seriously up until this point. When I eventually did get that call and I explained that I had not had a chance to work on it, and that I really needed him to pay my balance he was pissed! Here’s the kicker. After making a big stink about it, he asked me to send his documents back to him. I hung up the phone and went right to the post office to overnight him his documents. I wasn’t about to hold that up, or hold the documents hostage. Do you think my check was put in the mail right away? Was I given the same courtesy that I gave him in that last hour? Nope. It was a good week before his check to me got postmarked.

My client had made the point to me that all I had to do was call him. What he didn’t get is that that wasn’t what I wanted to spend my time doing. I didn’t want to call him to ask him to send me money. I hate doing that. It’s uncomfortable and as I said first thing here it’s a waste of my time. I shouldn’t have to call someone to ask them to pay me what they owe. They should be calling me to make sure I know when it’s coming. I do that. When I owe somebody money I don’t wait for them to ask me, I tell them exactly when I will pay them.

It was after this experience that I decided I had to do something different. This is where I take responsibility, look at my part and do what I can to fix the problem on my end, because clearly if I wait for my clients to grow a sense of common courtesy I’ll be waiting a long time. It seemed at any given time I had at least $10,000 in receivables and most of it past due. I didn’t feel like working for those people anymore. I didn’t feel like they respected me or my time.

It was time to flip the script. That was when I decided to set up www.QuickBooksAnswers.Info. This is where I ask clients to pay me up front. You go there and sign up for “sessions” with me and if you think you need a lot of time you can grab packages with up to 20 hours of time. Of course the hourly rate drops as you go up in time. To my amazement, I got no resistance from anyone. Wait no. I did get resistance from one person. The very same client I was just talking about refused to pay up front and he found me not having the time to work with him. He moved on, I’m sure to take advantage of some other bookkeeper and jerk them around when it came time to pay.

People respect you when you ask for a retainer.

Not only did I not get resistance from people on this. They respected me and told me I was really smart for doing it this way.

This has simplified my life so much. I no longer chase people for money. Occasionally I do get clients that I will bill after a while of working with them. One of them is proving to remind me of why I started collecting retainers. I will probably go back to that with her. In her case I know it’s because she gets busy and side tracked, but that doesn’t make it ok. I had another client take over a month to pay a $500 balance. Guess what I did. Next time she needed time, I asked her to go sign up. It’s especially helpful to have a website where they can go to pay you. If you have to stop and invoice them, it slows you down. Then I track the time, bill the hours and apply the retainer (liability) to the billing (A/R) to mark their bill paid.

Once a client pays you they will want to schedule the time. That’s tomorrow’s post – how to simplify your scheduling process..

Hint: let the web handle it for you

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