How to deal the “Late payment” issue with your client?
Delayed payment or late payment is one of the most unpleasant experiences that you will wish you’d never have in your work. It affects you really bad, like Martin Dune (2012) once said: “It can put you out of business”. It can make you suffer some stressful financial problems, lose faith in promises, hate your job and worst of all, damage the relationship between you and clients. Mrs. Le Ngoc Hien, the vice-director of Voice of Ho Chi Minh City People Advertising Agency (VOHAA) offers some advantages and tips on how to deal with “delayed payment”.
Have you ever come over the late payment issue while working with a client?
Yes, we’ve been through lots of situation about late payment and this issue in Vietnam is very normal. “Late payment” can be seen in business as delayed payment or even a sign of client that they are not going to pay you the rest of the money. Like other agency, VOHAA has to deal with same issues. In my opinion, this kind of issue is really popular.
Have you ever been in a situation of late payment? How do you feel about it?
Yes, we did. In some situation, even though that we signed a contract with lots of tight deadlines and sanctions for payment but still there are some clients flee away and never pay the money. Now with Vietnamese people, money is still a little taboo subject to talk about and people tend to say something like: “We are brothers (sisters), we shouldn’t care about the money issue” or “Money is just a small problem” etc. However, in advertising, money is one of big problems and we’re not working for free. If you meet a client usually say those sentences but never pays you on time, you should be careful.
We all know that the current economy is still difficult and this can be seen as barriers in negotiating a contract. However, we feel really unpleasant about those situations. In my opinion, as a role of the vice-director of the agency, I’ll also have to take a responsibility. I’ll lose my reputation not only with my boss who assigns that contract to me, but also with my employees who also work with me. Therefore, even though that the late payment can be caused by subjective or objective reasons, still other people will see me as unskillful client manager.
Do you know exactly what reasons for those late payment issues?
Well, if at first we don’t know, then we have to find out the reasons. On one hand, we will send emails and call our client to inform them that they are late for the payment; we spend more time to talk with them and give them suggestions. However, on the other hand, we should reach out and look for more information, by asking other agencies and by searching on internet. In general, we should look for more information from different sources. There are organizations and companies that are actually suffering bad financial problems but they don’t want your agency to know; and there are organizations and companies that they don’t want to pay. For example, if there is a company that haven’t paid you but still they are having an advertising on TV, then you should go and pressure their reputation: “You haven’t paid for our agency but still you have an advertising on TV, if you don’t solving this late payment problem, we’ll call to that TV advertising agency to inform them about this.”
Like Craig Buckler said: “You should nudge them harder?”
Reasons in these situations are very necessary. They give us not only information, but also suitable ways, methods to solve it and experiences to be proactive if those kind of issues are coming back.
How do you deal with these situations?
We have three stages: before we sign the contract, during negotiating the contract and when it comes to the deadlines of payments.
Before we sign any contract with any client, we should search for information from different sources about the clients in order to avoid risks. We’ll search for their current financial conditions, their reputation and their payment ability. Not only will we look on internet, but also through other agencies. We are living in the information age, the more trustworthy information we get, the more risks we can avoid. This step is really important, the most important step that other agencies usually forgets and this is very dangerous because when you come to negotiate to settle down the contract, if you are lack of information, you are putting you and your agency on the risky edge. As a negotiator, you shouldn’t take risk. (Thompson, L. 2009)
Firgue 1(Reproduced from cfbstubbs 2009): Be Proactive
Then, when the contract is settling, we should suggest client to pay deposit money, and small payments rather than one big payment. Payments which are divided based on progress is also another good way to make client feel less financial pressure. In here, if the client refuses to have this payment and want to pay all the money in the end of the progress, you should be careful because maybe they’ll flee away and won’t pay you. Back to the progress payments, even though that deadlines and sanctions were clear in the contract, you still have to call and email to remind your client when it’s near the payment days. Be proactive and not risky.
Firgue 2 (Reproduced from Coach Rod’s Blog 2010): You shouldn’t take risks.
Last but not least, when it comes to clients who are late for the payment for a long time, we’ll have to ask Vietnamese legislation to involve. This stage takes lots of time, money, effort and sometimes, you’re still unable to get the money back. No one likes this.
Firgue 3 (Reproduced from VolumeBuyers 2011): No one like this stage.
Therefore, like I mentioned before, you should be careful right at the beginning and collecting information, using them to avoid as much risks as possible, “Prevention is better the Cure”. In order to deal with this problem, client manager needs to have experiences in signing contract and skillful negotiation to avoid as much risk as possible. If they are not careful and experienced enough, they will end up bringing more risks. Also, client manager should be ingenious, proactive and aware of issues can show up unexpectedly in unpleasant ways.
Posted by: Lam Ngoc Hai Son (Yuki) – s3312617
“Be Proactive” 2009, image, cfbstubbs, viewed 11 May 2012, < http://cfbstubbs.pbworks.com/w/page/12272123/2-%20Habit%20One-%20Be%20Proactive>.
Craig, Buckler 2012, How to deal with non paying clients, viewed 10 May 2012, <http://www.sitepoint.com/how-to-deal-with-non-paying-clients/>.
Martin Dune (n.d.), Q&A: Dealing with Late Payment, viewed 07 May 2012, <http://www.startupdonut.co.uk/startup/financing-a-business/cashflow/q-a-dealing-with-late-payment>.
“No one likes this stage” 2011, image, VolumeBuyers, viewed 11 May 2012, < http://volumebuyers.wordpress.com/category/legislation/>.
Tenbrunsel, A. E., Wade-Benzoni, K.A., Medvec, V., Thompson, L., & Bazerman, M. (2009), The reality and myth of sacred issues in ideologically-based negotiations, Negotiation and Conflict Management Research.
UK Netguide (n.d.), How to Deal with Late Payment, viewed 07 May 2012, <http://www.uknetguide.co.uk/Business/Article/How_to_Deal_with_Late_Payment-100182.html>.
“You shouldn’t take risks 2010, image, Coach Rod’s Blog, viewed 11 May 2012, < http://rodneydwalker.wordpress.com/>.