Closing Out Projects and Getting Paid
We have several clients that are dragging their feet on their testing keeping us from wrapping up of our final product delivery and getting paid. Getting a commitment from them is nearly impossible. Is it acceptable to give them a firm deadline to test by and if not met, close the project, send them final invoice and disable our product until they pay? Additionally, we have several clients that are held on retainer and are not paying on our terms. Should we stop the projects until the checks are received?
Not a piggy bank
Hey Not a A Piggy Bank,
Ughh! It’s a horrible place where the client won’t pay you until they approve your work. There are solid ways to avoid this problem in the future by setting up a deployment and payment schedule at the beginning of the project, but that’s not where you are right now so let’s talk about the immediate situation.
I’m assuming you’ve poked and prodded gently so now you have to be tackle it head on. If you’ve been reading my column you know that any difficult situation should be handled in person or over the phone. My suggestion is to have this call first and then follow-up with an email.
“Hey client, I’m just calling to make sure we have a clear timeline on when you’ll have your feedback to us on the final product delivery? We have a really tight schedule coming up and I want to make sure we are able to respond in a timely manner to your requests.”
Then let’s say they are wishy washy when they respond and still won’t commit to a date.
“Oh you’re swamped and you just can’t tell me right now. I understand I really do. But, we have delivered the product and I have to pay my team, so I’m going to send the final invoice today. When can I expect to be paid?”
You know going into that conversation they’re not going to say, “Oh no problem! I’ll pay you today!”, but you have to tell them what you need. So if they balk and say, “We’re not paying until it is approved but we can’t tell you when we’ll approve it…” you have to point out that you don’t think that’s fair practice. You need to negotiate some kind of terms. Offer to set up a payment plan or suggest that you’ll send the invoice but hold back 10% so they have assurance that you’ll be there to meet their needs.
Only disable the product if you really think that it will produce the desired effect. If they aren’t using it yet anyway and you threatened to disable it, the only thing you’ve really done is annoy them. On the other hand, if they depend on the product to get their daily work done, then it could be the lever that actually prompts them to act.
Regarding your other question about whether you should stop work if a client isn’t paying you, my answer is yes. The first step is to find out when they are planning to pay you. If you’re totally confident that they will keep their promise, go ahead and keep working, but you’re absolutely within your rights to say, “OK great–I need to put my team on other work until we receive payment and then we’ll get right on it.” A lot of business owners get in trouble by trying to keep their teams busy with billable work, before really knowing when they’ll be getting paid for it.
Ask Molly is my weekly column where I answer your questions about the things that are keeping you from truly enjoying your work. I can’t help you with your personal life or your love life, but if you have questions about your work life, I’ve got you covered. Drop me a line below and ask me a question! – Molly