Getting paid: If it doesn’t happen, why are you in business? In your business, arguably the most important aspect of the administration of your business is getting paid. There are various ways you can go about seeking full payment for your services, but which ones work and which work best for you? This blog will discuss several things you can implement to ensure that you get paid timely and in full. It’s up to you to pick the one, or some combination, that you feel most comfortable with or that you believe would be most effective with your customer base.


When do you get paid?

This is a sliding scale analysis. You can be paid up front, in the middle or at the end.

In your ideal world, you would likely want to be paid up front, but this poses a couple of problems. First, your clients have to really trust you in order to do this and that may scare some people away. Especially in an industry where that is not common, you may see your customers flock to your competitors who do not require upfront payment. You’d also be subject to potential criminal penalties if you take the money up front but then cannot complete the promised services. In North Carolina, this can amount to a misdemeanor.

Most desirable to your clients is to be paid at the end, but this is very risky. We’ve found there are people out there who will receive full service and then try to negotiate the price down, knowing that it is very costly to try to collect the payment through the courts or a collection agency. If you do need to take payment upon completion, you should at least try to protect yourself by including a reasonable interest rate, required court costs and equitable and reasonable attorneys’ fees in your contract. These offer you added protection and a deterrence factor for your non-paying customer base.

Half upfront, half on completion. This splits the risk down the middle. Your customer will bear the risk that you won’t complete the service to his satisfaction and you will bear the risk that your customer won’t pay. This is better than nothing, but you’d still want to include the contractual protections with the interest rate, court costs and the attorneys’ fees. (Note, there are specific rules in North Carolina for allowance of attorneys fees that are not covered in this article)

By Milestones. If your service is a longer term project that can have measurable milestones, you should strongly consider structuring your agreement to receive payment based on certain milestones. This is similar to the half upfront, half on completion plan except that it breaks it up into far more segments. Customers are usually in favor of these so long as the milestones are measurable and the amounts to be paid are reasonably related to the amount of work completed. For example, you can take one fifth up front and then another one fifth payment for each 25% of a project you complete. The problem here lies in determining where those percentages lie and how many segments you should divide the work into.

If you’re doing the milestone approach, you should establish that you will cease work completely if the customer is a certain number of days past due on a bill. By continuing to work, you’re adding the risk that your customer will never pay and you’re showing your customer that you’re willing to work for free.


How do you get paid?

There’s a correlation between how easy it is to be paid and how often you get paid on time. Therefore, you should offer as many easy to use payment options as possible. If you only accept cash, you’d make it harder for those people who only carry credit cards with them.

Early in the life of the firm, we only accepted checks. We were afraid of losing the cash and didn’t have a credit card processing company set up yet. It was very apparent that we needed to accept other methods of payment, as most people we spoke with did not have checkbooks, or they used them so rarely, they’d were reluctant to treat us as a special purchase. We framed ourselves as being a unique good that required a special payment. This is not something we wanted to do. It made people hesitate. On the other hand, other companies may want to require special payment instructions to stand out as unique or for legal reasons.

The most common methods of payment are:

  1. Cash;
  2. Credit and Debit Card;
  3. Autodraft; and
  4. Checks.

If you don’t have a mechanism to accept all three, you should consider doing so. Accepting credit cards should be broken down as well. Can you accept credit cards in person, over the phone and online? There are hundreds of credit card processing companies out there, so you should shop around in your area, and not be afraid to use more than one company if there’s a benefit to doing so.


How do you invoice?

Customers will rarely pay you without a reminder. The longer you go between the last reminder of payment and the payment being due, the less likely you are to get paid. You also do not want to wait long after the service is provided to start reminding your customer that payment is due because the value of your service diminishes the longer you go from it being provided.

When initially engaging the customer, find out how she prefers to be invoiced. The idea is to figure out the easiest way to ensure that she receives and views the bill. If she prefers email, send it by email. If she prefers in person delivery (and it’s economically viable to do so), deliver it in person.

On the invoice, you should include how to pay you in the easiest way possible. If by check, it may be worthwhile to include a self-addressed stamped envelop that your customer can use to mail the check to you. If an email, you should include a link to the payment portal with the amount of payment and personal information already filled in. (Note. There are several online accounting softwares that do this invoicing for you)



Getting your customer to provide their credit card information on the original contract, and having them sign that they authorize you to charge their card if the invoice is more than 15 days past due is a great way to ensure payment even if your customer forgets or neglects to pay you.

Autodraft is another great payment tool. If you just withdraw a certain dollar amount every month from your customer’s provided bank account or card, you’ll be far more secure in your payment.

You customers can contest credit charges, and that process will entail an arbitration process through the credit card company. Failing to respond to their requests will ensure that you will lose that arbitration and lose the money from the credit card company. This does not, however, prevent you from obtaining the money owed in some other way.

You shouldn’t be too flexible with your collection practices. The phrase “if you give an inch, they will take a mile” applies heavily here. You shouldn’t let your customers feel as though your bill is less important than other bills or that not paying you will have no consequences. Once you’ve given this impression, you will find yourself with a billing crisis.

If your customers do have a serious money problem, you can negotiate a payment plan with them. This will allow your customer to feel as though you are doing them a favor, but you’re still going to get your money. Be sure to include some form of interest in the payment plan to compensate you for the delay in payment. Also, get the payment plan in writing, letting your customer know that failure to follow the plan will result in collection activities.

If you’re working for larger sums of money, it is perfectly acceptable to demand that your customer consents to a credit check or provide some form of security interest.

Many industries have built in security interests, like car mechanics and contractors that work on a home. In these cases, if the customer doesn’t pay, you may attach a lien to the property you worked on, but there are specific rules you must follow to do so.


Still no Payment

Even if you do everything right, you may still end up getting stuck with a customer that doesn’t pay. If that happens, you need to make a business decision as to whether or not it would be worth pursuing legally. Whatever you do, do not try to shame the customer into paying. Bad reviews and scathing publications that the customer has not paid may result in defamation claims against you, as well as potential violations of debt collection laws and other state protections. An easy way to protect yourself from most of these types of laws is to never do anything in retaliation. This isn’t 100% protective, but it will help. It also makes great business sense to not retaliate.


For more information, please contact us at or by calling 919-912-9640.



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