This is a short post.
I dress it up with a couple of examples.
Because my business is incorporated, I hired a law firm to handle the legal details to ensure my company stays properly incorporated. It’s only a few hundred per year, fortunately.
In my jurisdiction, companies must file a simple document annually in order to remain properly incorporated. While it’s simple to fill out, easy to find online and costs less than $100 to file with the guv, I’m notoriously bad at keeping track of these mundane details.
So bad that a few years back I had failed to file this one-page document for a couple of years. My company was months away from being deregistered. While on the face of it that doesn’t seem like such a big deal, financially it would have been. The resulting problem from having a company falling off the companies registrar is that the tax authorities consider that a deemed disposition (fancy way of saying a sale).
The taxes owing from a deemed disposition would have been tens of thousands of dollars despite the fact that I actually received no revenue. That’s the “deemed” aspect of the legal term.
On top of that I’d have to reincorporate, change all documentation, etc.
It would have been a nightmare.
Since then, I pay a lawyer a few hundred per year to handle filing the necessary incorporation documents. It’s money well spent.
Hey Jon, is the good business advice to hire a lawyer?
No, it’s not the gem advice I’m getting to, but it is good advice generally.
Another takeaway is don’t neglect the legalities of your business. Doing so can have dire consequences.
I’m getting to the good advice.
So I hired a law firm in downtown Vancouver. They’re fantastic. Friendly folks, capable, prompt (other than invoicing me), get everything done on time, etc. In fact, recently I had need of their advice about an investment. The advice and assistance was invaluable.
Here’s where I scratch my head.
Each time they do work for me and it’s wrapped up I ask them to send me an invoice.
I wait and wait and wait.
It’s no skin off my back whether I pay them other than I like getting my bills paid ASAP so that they’re dealt with while fresh in my mind.
I literally waited 3 months for their invoice. Once I received it, I paid within the hour and it was done.
The last particular bill was nearly $3,000, most of which pertained to legal advice regarding an investment (unrelated to online publishing).
That $3,000 could have earned the law firm money had they collected it 3 months prior.
Running a 100 lawyer law firm isn’t cheap. Surely they have better uses of money than letting it sit with me?
And here’s today’s business advice nugget.
TODAY’S TIP: Always chase money you’re owed as soon as humanly possible!
Your money is better in your hands than someone else’s hands.
It’s so easy to push off tedious tasks of preparing and sending invoices. In your mind you think you have more pressing matters such as running your business. Invoicing can be done any time.
This is bad business practice IMO.
Get that money working for you asap.
Of course you don’t want to be a jerk. You can’t expect payment within 30 minutes. If you offered terms such as net 30, 60 or 90, you need to honor that as well. However, don’t delay getting the invoice out because arguably the net duration is triggered when you send the invoice out.
I’ll say it again. When you’ve done the work, get that invoice out immediately. Then ensure they pay within the payment terms. Once the deadline expires, it’s time to chase them down.
I learned this as a young lawyer from my mentor who was very good at this. In fact, many lawyers are notoriously bad for sending out invoices and chasing down unpaid invoices. My mentor wasn’t.
I remember I had finished a file. It was time to bill it. However, I started work on another file telling myself I could get to the invoice later.
My mentor asked me a day later if I had sent out the bill. I said I hadn’t but I would a couple of days.
He sat down and explained that when work is done and ready to billed, that’s a priority. Sure, delaying here and there isn’t going to kill a business, but if you let every file go unbilled for months, the business suffers.
It’s easy to let your accounts receivable get out of hand. Many businesses do.
I dropped everything, prepared the bill and sent it out.
I did that for every legal matter I worked on after that and do the same with my online business.
These days much of my revenue is paid out automatically on specific days of the month by ad and affiliate networks. However, sometimes I’m owed money for one-off arrangements such as sponsored posts, custom referral deals, etc. Instead of waiting until they decide to send me the money, as soon as I’ve fulfilled my end of the bargain, I hound them for the money. If the invoice isn’t paid within the week, I follow up.
I also pay attention to every revenue source monthly ensuring it’s the right amount and that I received it. There have been instances where I didn’t received the money. Had I not said anything, I could have missed out on a lot of dough.
It’s too easy to assume everyone is paying you like clockwork. Never assume this. Automated payment systems fail. It’s happened to me for whatever reason.
Recently a buddy of mine realized an ad network owed him $15,000. Good thing he was on the ball or he’d have never received that money. He chased them down like a cheetah on a gazelle and got that money ASAP.
Yes. Nobody likes to create invoices and chase people down for money. But that’s a key part of running a business. Fortunately, it’s not often I send out invoices, but when I do, they go out as soon as the work is done and I chase it down until the money is in my coffers.
I can put the money to much better use in my business than letting it sit in somebody else’s account.
Jon runs the place around here. He pontificates about launching and growing online publishing businesses, aka blogs that make a few bucks. His pride and joy is the email newsletter he publishes.
In all seriousness, Jon is the founder and owner of a digital media company that publishes a variety of web properties visited and beloved by millions of readers monthly. Fatstacks is where he shares a glimpse into his digital publishing business.