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RE: Contractors: Run Credit Checks for Questionable Customers?
Subject:RE: Contractors: Run Credit Checks for Questionable Customers? From:"Tanja Rosteck" <tsr -at- videotron -dot- ca> To:"TECHWR-L" <techwr-l -at- lists -dot- raycomm -dot- com> Date:Fri, 17 Aug 2001 14:29:57 -0400
Robert Kennedy asks,
> HAVE ANY OF YOU PAID $50 TO RUN AN INTERNET
> CHECK ON A COMPANY LIKE THIS PRIOR TO DOING BIZ
> FOR THOUSANDS OF $$$ ???
>
> PS: If I demand 1/3 up front and 1/3 in the middle,
> he may balk.
There's nothing wrong with asking the client for two or three credit
references before starting the work (assuming you're the lucky winner
in the bidding process). It's an accepted business practice, and if
your client is legit, they should have no problems with this. Explain
it's nothing personal, simply part of your standard policy for all new
clients. You can also run a credit check through Dun & Bradstreet or
some other credit agency if you don't want to do it yourself.
As others have suggested, having a well-defined contract can really
save your hide down the road if the client is unwilling or unable to
pay. It doesn't have to be full of legalese, but state your payment
and invoicing terms *very* clearly so there's no room for
misinterpretation. Also state what will happen if they DON'T pay
within your terms - for example, if they get 45 days behind on a
payment, you will stop all work on the project, and work will not be
resumed until the outstanding payment has been received. Whatever
terms you decide on, make them crystal-clear.
Also, if the project is going to take something like 4 or 6 months,
yeah, I can see that they might balk at 1/3 up front and 1/3 in the
middle. That could be a very sizeable chunk of cash for the client to
cough up in a short amount of time. Perhaps you could break those
payments down - ask for a 15 or 20% deposit up-front, then invoice
every 2 or 3 weeks or something. This would be more manageable for the
client, and probably better for you too since you'd have regular
payments coming in to help your cash flow.
It's natural to be paranoid and think that someone's going to "take
the money and run", but generally I've found that if you've spent a
lot of time consulting with the client and have demonstrated that
you're serious about your business, they will accept your terms. Of
course there are always exceptions, but if you're doing all the
compromising and the client is unwilling to negotiate, you have to
decide if it's really going to be worth your time working with that
client anyway.
*Tanja
--
Words4Nerds: big technical writing for small business
Email: tanja -at- words4nerds -dot- com
Phone: (514) 935-0463
Web: www.words4nerds.com
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