It would be an understatement to say that getting paid is an important part of any business. Yet in our industry, I’ve seen some pretty loose due diligence, billing and payment practices; practices which unduly increase a company’s financial exposure. And I’ve seen what happens when people don’t pay close enough attention to their financial exposure.
It’s for this reason that I wanted to pass along a few tips on not getting burned on payment. You’ve done the work, you deserve to get paid. Follow these instructions to increase your odds.
1. Do your homework first. Before entering into any business relationship, ask your contacts around the industry regarding the payment history of the company. If you don’t know anyone, do some research online. Often a simple search will reveal things that might give you cause for concern. Dun & Bradstreet has a great service where you can inexpensively run a small business credit report. That’s not much money to spend to help assure an informed decision. Before proceeding to do business, make sure you feel comfortable with the company.
2. Be especially cautious at the beginning of a new business relationship. Payment should be prompt, simple and as promised in your contract. Make sure you meet all your invoicing and other obligations on time, and then pay attention to whether the other party does the same. The details do matter, and if there are problems early on, pay even closer attention. This could be a warning sign of things to come. Document any problems or concerns through a clear email record.
3. Watch out for late payers. Often late payment is an indicator of deeper financial troubles at a company. This is a time to be especially careful. Do not extend more credit than you can afford to lose. While that’s always good advice, it’s especially necessary when someone is not consistently paying you on time. Once a company gets behind on their payments, the odds that the next payment will be late, or fail to arrive at all, dramatically increases.
If a company gets behind in even one payment to you, this is a good time to ask around the industry. Talk to people you know, and ask if they are experiencing payment difficulties with the company. Also, just like you did before entering into the relationship, do some research online and see if anyone is experiencing the same thing. This might be the time to purchase another credit report.
If you are concerned, and can’t get payment or adequate assurances, cut the relationship. Entire businesses have been destroyed by one non-paying customer when credit is being extended over a period of time.
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Beware of tracking system failures. We all understand that occasionally systems fail, but it should be rare when it comes to commission or payment tracking systems. More common problems should make you suspect that numbers are being manipulated. If a company’s online reporting systems are often unavailable, or you experience repeated, unexplainable changes in the numbers, beware. These are signs of a company that at best is having difficulty keeping accurate records, and at worst is playing with the numbers to its advantage.
Our industry is one in which extensive trust is required between parties who do business together. Solid, consistent, payment, billing and reporting practices help to build the trust that is the foundation of any good business relationship. Pay attention to the details, and you’ll increase your odds of getting paid.
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Come back to the iLegal column every week as we get specific about the rules, regulations, laws and trends that affect the online advertising industry. Each week we discuss important legal issues, talk about how to avoid the pitfalls, and cover the breaking legal and regulatory advertising industry news.
Legal Disclaimer: Information conveyed in this column is provided for informational purposes only and does not constitute legal advice. These materials do not necessarily reflect the opinions of Digital Moses, and is not guaranteed to be complete, correct, or up-to-date. The column is provided for "information purposes" only and should not be relied upon as "legal advice." This information is not intended to substitute for obtaining legal advice from an attorney. No person should act or rely on any information in this column without seeking the advice of an attorney.
Mark Meckler is the General Counsel for UniqueLeads.com, Inc., and Unique Lists, Inc. Mark sits on the eCommerce and Technology Committee of the Association of Corporate Counsel, and is a member of the International Association of Privacy Professionals.
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