It’s an unfortunate part of life as a self-employed contractor, but occasionally you’re going to come across customers who either pay very slowly for their work, or don’t want to pay you at all after you’re finished. What should you do in that situation?
The first step is to assess the problem and find out why. If it’s because your work wasn’t up to the customer’s standards, or because there was a minor (but understandable) misunderstanding about the terms, you can probably fix things pretty quickly.
In other instances, though, more serious measures will have to be considered. Then you’re looking at dealing with lawyers and other collections professionals who are going to charge you a pretty hefty fee, and might not even recover all of your money. As any experienced contractor can tell you from experience, it’s best not to be in that situation in the first place.
To help you avoid those kinds of problems, here are five tips for reducing the risk that a contracting customer won’t pay you:
1. Get agreements in writing. Even if you use a simple contract, use one and get it signed by both parties. Taking this simple step can save you a lot of time and aggravation later.
2. Request deposits for large projects. Even worse than not being paid for your work is having spent a lot of money on materials or subcontractors first. If the job involves significant risk to you, require an up-front deposit.
3. Don’t be the lowest bidder for a construction project. Often, customers who don’t pay will choose the lowest-bidding contractor with the least amount of experience. You can avoid these situations altogether by charging professional rates.
4. Trust your gut when you aren’t sure. If you feel unsure about working with a new customer, trust your instincts and either draft a tighter contract or move on to the next job.
5. Get to know a good lawyer. Eventually, nearly every contractor has some kind of problem regarding payments. Having a good lawyer you can call on when you need them makes a huge difference.
Running a successful contracting business is a lot easier without lost payments and other preventable financial issues. Follow these tips and make sure you get the money you deserve for your hard work.
Are you thinking of becoming a licensed contractor this year? Why not get in touch with CSLS today and let one of our counselors help you find the program that’s right for your budget and schedule?
