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Fourteen Rules for Billing Clients

Cliff Ennico on

A couple of weeks ago, I wrote a column with "25 Rules for Better, Happier Clients." I frankly thought it was just common sense, but I have received a torrent of emails from readers saying this column has changed the way they do business.

One typical response: "I have printed out your column, reduced it to the size of a Post-it note, and I am having copies laminated so I can keep them on my computer, in my wallet and on my bedside table."

People seem to like "list" columns, so here's another one, but this time one focuses on tips and advice for billing clients so you can keep the number of "deadbeats" to a minimum.

No. 1: Bill early and often. Clients are more likely to pay frequent, small bills than a single, massive one when the job is done.

If you send your bills out late, your customers will pay late. Set aside one day a month (the fifteenth, the last Monday of the month, whatever works), type up your invoices and email them out promptly. When you finish a big job for a client, send them the invoice right away while their memories of all your hard work are fresh.

No. 2: Always, always, get some money upfront. Once you've done the work for a client, you can't take it back. Getting an upfront retainer fee sends the client a strong message that "this is someone who must be treated with respect."

 

No. 3: Make sure your client knows exactly when payment is due. Your client contract should state clearly that "payment is due within X days following the invoice date." Payments that are due "when the project is completed" or (worse) "when the client accepts the work" are open invitations to a fee dispute.

No. 4: Make sure your contract allows you to charge interest on overdue fees. Believe it or not, in most states it's illegal to charge interest on an invoice without warning the client first. The penalty rate should hurt: 1% or 1.5% a month is typical.

No. 5: Flat fees should always be at least 125% of what the bill would be if you charged by the hour. Don't give your clients a discount when charging a flat fee. You are taking a risk that the job will take longer than expected, so build in some padding. Make it "nonrefundable" if you can.

No. 6: Small or discounted fees should always be payable in advance. When charging a discounted or courtesy fee, you shouldn't wait to get paid. That's adding insult to injury.

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