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Know-How Exchange

Topic: Customer Behavior

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Posted by businessowner on 125 Points
I have many clients, but I am seeing a pattern in my many years in the advertising world (25+ years) a lack of payment from minority owned businesses. It points more towards the female minority-owned business.

I'm tracking at about 50% of the clients do not pay their bills.

I am wondering if anyone else has had this same issue? I've lost thousands of dollars in design, marketing and time spent helping these companies grow and develop, only to be stiffed on payment.

I just signed a new client the other day full branding & website package. I sent an initial invoice (I bill 30-30-30) to get started on their site design. They claimed they would send payment (via online payment system) and I am still waiting on payment. Unfortunately, I anticipated this very thing happening based on my previous clients.

Has anyone else experienced this before?
  • Posted by andrew on Accepted
    That sounds incredibly frustrating. Could it be a lack of payment options (credit card, transfer, even PayPal) or the follow up process? I'm not suggesting they are the reasons, just trying to think of why so many of your clients don't come good with payment.

    Would it help to provide subtle consequences for not paying (i.e. project will be delayed, competitors progressing etc)?
  • Posted by telemoxie on Accepted
    If I may be honest rather than politically correct:

    I have personally found it to be more difficult to collect professional compensation from women than from men. I sense it is because they have a network of competent contacts who will work cheaper than I will. I don't think men and women on the same (Vive La Difference). it has been said, the best man for a job is a woman. I believe that, generally speaking, women are more competent at performing ongoing tasks. but men are better at some things, and it is my personal belief that men are better at determining which tasks should be done in which tasks should not be done.

    My experience has been that once I go and show someone what needs to be done, and how to do it, they can usually find some woman who will do an equally good or better job for less money. And they can usually find a woman who is much more compliant and cooperative and collaborative that I am.

    If I were to do that in business again, I would only work with male clients.
  • Posted by Gary Bloomer on Accepted
    Yes, I've experienced this and the only way around it is full payment up front before any work is done.
  • Posted by chiron34 on Accepted
    The problem is not specifically female. I experience similar events in a predominantly male industry, venture capital. My way of dealing with this is to make it quite clear in the sign-up agreement/contract that if any payment is missed, all work for the client will stop until the scheduled payment is made. However, you have to be serious in implementing the policy and not let emotion influence you.

    One point that may or may not be influential in getting the procedure to work is that my initial payment to start the work is quite low, so the client does not start with a preconceived sub-conscious ill-will based on a large advance payment.

    Hope this helps.
  • Posted by nlytenmedia on Accepted
    I wouldn't spend a lot of time analyzing the demographics of non-paying clients since you ultimately can't say for sure who will pay their bills and who won't. A client who is in good standing today (and maybe tomorrow or two weeks from now) may turn into a non-paying client a month later.

    Focus on taking more of the risk out of how you do business - instead of 30-30-30 billing, maybe look at charging an upfront fee before even beginning design and/or using a legally binding contract. A contract can even include a request for personal guarantee; which means the signing individual can be held responsible for owed amounts beyond the legal responsibility of the business itself.

    When I freelance design work, I request 50% up front before even starting and then 50% upon completion. The contract I use clearly defines scope and reiterates these payment terms. It protects both the client and myself from project abandonment.

    I invest an hour of my time for free to meet with the client beforehand to understand their project and get a feel for their business. If something seems completely amiss, I don't undertake the project. I might recommend doing the same if it's not something you already do.
  • Posted by Shelley Ryan on Moderator
    Hi Everyone,

    I am closing this question since there hasn't been much recent activity.

    Thanks for participating!

    Shelley
    MarketingProfs

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