Today, a colleague reached out with a question and a problem:
“Kai, I just had a long-term client stiff me on a small (3-figure) invoice. Should I call my lawyer? Send them to collections? What the hell should I do?”
I commiserated with my colleague — getting stiffed by a client is never fun — and we got to chatting about the experience. Turns out, once the emotions had faded, there were some prime business lessons at the top of mind that we got to talk through.
Lesson #1: Always charge 100% upfront
Don’t work for free.
Alas, when you’re billing after the fact, it’s all too easy to end up inadvertently working for free. A client misses an invoice (or skips town on an invoice) and, whelp, you’re out of options.
Instead, charge 100% upfront. Let your lead/prospect/client know the price and the scope. Send them an invoice and a link to pay. If they decide not to pay, that’s fine; at least you know before investing hours of your time.
One of the best ways to charge 100% upfront (and avoid getting stiffed) is to sell productized services. With a fixed-price, fixed-scope offer, it’s easy to say, “This is how much it is, this is what you get, and this is where you pay.”
If you’ve been itching to learn more about how to design + launch + promote a productized service, then click this magic link to get on the interest list for my upcoming course Design Your Productized Offer, created with Marie Poulin and launching this year.
Lesson #2: Don’t throw good money after bad money
When you get stiffed on a bill, it’s natural to want to enlist some professional help. Like a lawyer. (Or a mobster.)
But lawyers (and mobsters) cost a lot of money. The bill from your lawyer could easily eclipse the value of the ignored invoice.
It’s valuable to pause and ask yourself, “Would it be worth pursuing this, guns blazing, even if I didn’t get a single dollar out of it?” In most cases, the answer to that is “Nope.”
Conserve your energy and money. You’ll need it later.
Lesson #3: Don’t let anyone live rent-free in your head
When something like this happens, it’s easy to get frustrated and start ruminating on the situation. The client wronged you, they suck, etc., etc.
If that happens, pause. Take a few deep breaths. Think about something else for a bit.
Once someone stiffs you on a bill, the worst thing you can do is to allow them to live rent-free in your head.
In a sense, this is a riff on sunk cost. You’ve already spent the time/energy on the project; no amount of anger or rumination can get that time back.
So, instead, do the hard thing. Take the lessons you’ve learned in place of payment and move on.