Collecting A/R from Scoundrels

10 Jul

A friend of mine has done a lot of individual projects for book authors, editing and helping them get to the publishing stage (please reach out if you’d like an introduction). In April, she took on a new “high profile” client (we will call him “D”).

D still hasn’t paid her 90 days later. I could mud-sling and share his name with you (if you are a Minnesotan in business, you no doubt know his name), but I’ll spare getting thrown too far into that circus – with that clown…

Today, I’d like to focus on A/R and collections. If you sell something, it’s darn important that you collect your money. As a self-employed businessman, I learned this early in my career. If you are a salesperson, you need to land paying clients, or your commissions will be reduced. As a sales leader, your job may depend upon it. As an owner or C-level leader, it’s our meat and potatoes!

I’ve been fortunate to have few troubles collecting from my Blue Octopus clients and have ended up in small claims court only once. I make sure a contract is signed as I collect the retainer. Also, I usually know them first-hand or they are recommended to me by someone I personally already know.

So, in our example, what went wrong? What did Amanda control?

1.      She didn’t ask for the money up front.

I’ve worked in the temporary staffing universe in the past. It was the worst-case scenario because we paid our employees/contractors weekly at Jeane Thorne… and the client paid monthly; or in the case of the fortune 1000’s, we got paid every 60 days.

At Blue Octopus, I do everything (including consulting projects) on a retainer. You don’t have to ask for a lot of money but getting the invoice, W-2 and a small stipend out of the way early definitely helps.

2.      No contract was signed.

It was fishy from the very beginning. The book publisher met at their offices with Amanda and D to discuss the rough draft of the book. No one signed a contract. It was a friend of a friend deal, and it seemed like Amanda could take it at face value. Unfortunately, she has learned otherwise.

3.      The end-client / author had a “reputation” for paying slow or not at all.

Not sure I have to say anything more.

4.      It was unclear who was responsible for the invoice.

The client that hired Amanda did it in an odd fashion. The manuscript was delivered in person to Amanda’s home. The email addresses given to Amanda were all personal emails. It was fishy to say the least. We’ve found out in the end that the employee did the project “off books”. She, of course, didn’t claim responsibility – and D, the scoundrel – errrr “author”, has disappeared.

5.      She didn’t “chase” the collection very aggressively after 30 days.

I always make a phone call if an invoice hasn’t been paid in the first four weeks. It’s amazing how a polite phone call can turn it around that very week.

6.      Amanda didn’t chase it aggressively at 60 days.

In fact, at this point, everyone was ghosting her. There was never a follow up meeting to go over Amanda’s 30 hours of edits. The “three-week project” was delayed and delayed and delayed… thanks to the devil-who-shall-not-be-named. He said the book would be out last September, then March… Ummmmm, what?

7.      It’s dead by the third month…

The money is gone at this point. Amanda thought she had the golden ticket because she was the only one with a copy of the edits. She thought she had a long-standing publishing company backing the project. We all take risks when we take on new clients. Amanda is not the dumb person here, but you better believe, she’s going to modify her process for the next client.

The Moral of the Story?

Be mindful of some of the steps above when starting out with a new client. Also, don’t do business with dumb people. They do dumb things and don’t care about their reputation. If they’ve cheated in the past, they are going to cheat again. And Amanda, if the book sucks after your first read-through, maybe chalk that up to the price of doing business and pass on it?

Amanda has some decisions to make. She’s obviously not going to be getting her check but there isn’t a digital copy of the manuscript (because the client is dumb) and she has all the edits. I will pass on any of your recommendations to her.

Good luck to everyone with your collections!

It’s time to grow faster~ Drew

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