Checks and (im)balances

Running a client-based business – whether it’s a shop full of employees or just yourself – isn’t easy. It doesn’t get any easier when your clients don’t pay.

I’ve wanted to comment on David’s recent blog regarding running a business on credit, but didn’t really have an example to cite until now. First, please understand that I see David’s point and agree with it. But sometimes, as one of the blog’s comments noted, it’s all a matter of timing – how I pay my bills is often a matter of how my clients pay me.

As a woodworking writer, everything I do is typically a one-off job done either as work-for-hire or on a royalty basis. Occasionally those overlap with royalties coming many months after a work-for-hire check for the same job has long since gone into and out of my banking account. This is probably similar to how many of your shops work. And, like you, I have lots of clients, each of whom has a different idea of what a timely payment schedule is. Most are very timely, some aren’t. If business is really, really good I, like you, can simply choose not to do business with the less timely. But when business is merely good or just so-so, I don’t have that luxury. I’ll take the job from those that I know are slow to pay because I have to.

But here’s where timing comes in. Usually, things tend to balance out with enough jobs in the pipeline that there’s a check or two coming in while the slowpoke checks eventually catch up. As it happens, I just recently received a big check I’ve been “expecting” for nearly three months now, and it comes right in that lull between two other assignments. It’s a juggling act that usually works, but not always. Sometimes the only things in the pipeline are those slowpokes, and they’re taking their sweet time. Those are the days I run hopefully to the mailbox with a check deposit slip and car keys in hand.

Get enough of those days back-to-back, and it’s sometimes necessary to pay bills with a credit card. I hate that, but thanks to timing and occasional slowpoke clients, sometimes I have no other choice. I run on my income when possible, just as David discussed in his blog (and, in truth, that’s most of the time), but every once in a while I’m thankful for my good credit rating – and my credit cards.



  • Jeff Duncan says:

    I’m a small shop as well and have to say I don’t necessarily agree with David’s viewpoint on borrowing. As a business having the ability to borrow money if/when needed is very important. Sometimes it can be b/c of the slow pays as you mentioned. Sometimes it’s not slow pays, but it’s b/c you can’t finish a large project until several other subs finish their work, and so your sitting on a half finished project for several months after already having several months invested in the fabrication!

    Sometimes it’s b/c you want to branch out and expand your offerings requiring the purchase of say an edge bander, or new spray booth, or a CNC. In any event it is difficult to grow a business without the ability to borrow money. I’d imagine any successful entrepreneur would scoff at the idea of not borrowing money to grow a business. And since the concept of borrowing extends back in time to before the concept of currency, I think David’s camp is in the minority.

  • Val T. says:

    I have run into a few clients that are slow to pay. After they do that once, if I do work for them again, when I figure the quote I add in some “interest” to cover some of cost of them being late with the payment. I do not tell the about it. If they pay on time it is a bonus.

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