In accounting, there's something called "Allowance for Bad Debts". It's where a business estimates how much they probably won't collect, from all the money currently owed to them by customers. I suspect that this number, for most businesses, has gone down quite a bit, simply due to technology.
When I started my bookkeeping business in 1997, I realized that being self-employed meant there might be times when a customer wouldn't pay me. I could easily imagine that it making me very, very angry. So, I Made a Decision, right then and there, that I wasn't going to let such situations dominate my thoughts. I'd have to move on. After all, sometimes not getting paid was a part of any business.
It actually turned out to not be much of a problem. At first, whenever I had an appointment for doing a Qbooks tutorial -- for those who wanted to do their own bookkeeping -- I told them during the first phone call that I needed to be paid at the end of our appointment. Nobody ever questioned that, and some were even surprised that I might think otherwise. Eventually, when I realized that non-payment wasn't any kind of problem for me, I stopped demanding immediate payment. Still, most paid me on site, and for large one-time bookkeeping projects that I did at my office over a period of time, some asked if I wanted a prepayment, and I was always so surprised at such offers that I turned them down.
I have had a few situations where I didn't get paid for my services. In most cases, I knew the person didn't have any money, since I'd seen their bank accounts, so I didn't try very hard to collect. Just wrote off the amount owed to "Bad Debt Expense". After all, I realized, it's not like I was going to miss, say, $150 a month from now, let alone a year from now. If I'd had it, I would have spent it, so I wouldn't have had that money in hand for very long, anyway. So much easier to just let it go, than to harass people who were already stressed and embarrassed about their financial situation.
I well remember one situation when I was still recovering from the economy crash due to the housing bubble. A man called me to clean up his books for the prior year. Since I really wanted the business, I didn't want him to hesitate about using me, so I said, "I'll do the whole job for a total of $250." Without skipping a beat, he said, "Let's just make it $500 and do it right." Oh. Okay. Now, I do all his bookkeeping for two different companies, for a total of $350 a month. At one point, he was going to stop using me for his company that had few transactions and just do it himself, so I agreed to give him a training session when he was ready. A few weeks later, he said, "I've decided to keep you on for that company. The $175 a month doesn't matter." I liked his way of thinking.
I've also learned how important it is not to judge people by their surroundings. I had one guy who had huge plastic tubs full of paperwork, going back many years. He didn't even want me to do bookkeeping. He just wanted me to sort all the papers. So, I took all the tubs home, and as I did the sorting while watching TV over the course of several days, I started thinking I should have demanded partial payment up front. After all, the guy lived in a run down part of town. What if he didn't have any money? Well, I dropped off the tubs back to him, neatly sorted, and handed him an invoice for over $700, which was a large amount for my business for one invoice. He paid me on the spot.
Likewise, I once had a couple call me for Qbooks help. In looking at their location online, I wasn't too happy about where I needed to drive to get to their house. Sure enough, when I got there, many houses had junk in their front yards, and the street was crowded with old cars parked at the curb. Could they even afford to pay me? The guy had an electrician business, and his wife handled the bookkeeping. Turned out, they made over $100,000 a year. What they were doing raising their kids in an area like that, I have no idea.
Nowadays, almost everyone pays immediately, which is so, so nice. For regular clients on a flat fee, I run their credit card at the end of every month. For others, I email an invoice, and they can pay by doing a few clicks from within the email, and most do so within 24 hours. There is very little snail mailing of invoices, and I almost never have to do phone calls to ask why I haven't been paid.
I've been in business for 21 years, and my working life is better than it's ever been before.
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