Ripped-Off Again! (…only this time I did something about it)

“Sorry, but we have decided not to accept your proposal.”

That’s what my client told me three months into the contract. I was left stranded with hard costs and salaries to pay. I had just been taken for a ride. Again.

The anger. The frustration. ARRGGH!

I have been an entrepreneur for two decades so I should be used to dodgy clients. I’m not. A few weeks later another client refused to pay. Again, months of work, my team doing everything asked of them. They simply replied: “If you say we owe you the money, go to Court and prove it.”

Any business owner, freelancer and independent contractor knows that the Court system is out of reach. Even the Small Claims Court takes time, effort and preparation. All the opposition party has to do is lie and claim that the work was not delivered correctly. Because service is so subjective, it becomes difficult and time consuming for you to prove otherwise.

There are three reasons why small businesses would rather write off a bad debt instead of collecting it:

Reason One: We don't want to harm the relationship. We hope that, by some miracle, the other party will come to their senses and business can carry on as usual.

Reason Two: It’s quicker to write off a debt than collect it. The time taken to prepare a case is better spent elsewhere.

Reason Three: Enforcing a claim is expensive, risky and often the amount is simply too low to justify it.

Whether it’s a large corporation delaying payment to 90 or 120 days ‘just because they can’ or a client who is really struggling with cash flow, the fact is there is a gaping hole in the judicial system.

I have had enough so I am plugging that hole.

I contacted a few people and The Gentle Reminders Club was formed. 1,000 businesses from 15 different countries joined in the first two weeks.

In the current legal system the burden of proof is on you (the supplier) to prove that your client owes you the money. This is unfair so the Club developed it's own test. The client must prove that they lodged a complaint at the time the invoice was issued (or very soon afterwards). If the client did not dispute the invoice when it was issued, they cannot complain weeks or months later that service delivery was a problem.

If the client passes the first part of the test, now they need to pass the second: If you did complain, did you give the supplier a reasonable chance to make it right?

This simple test works brilliantly. Dodgy companies fail it every time.

So now the big question: who cares? The Club is not a law firm and it is not a registered debt collection company. So what stops a client from simply ignoring their letters?

The answer: reputation. A client who does not pay is listed on the website as a warning to others. (Read my article on reputation as a form of law enforcement here.)

In fact there are three key components that make the Gentle Reminders Club work:

1. Choose from a variety of letter templates. The Club will automatically send weekly reminders for the outstanding invoice/s. You will never have to actively collect money again.
2. If the client has a legitimate problem, there is a confidential and private chat room that only you and your client can view. This ensures that communication around the invoice is efficient.
3. Finally, fast-payers are listed on our website… and so are slow payers.

The ethos of the Club is this: all we wish to see are two happy parties. It’s so easy to go from having a bad reputation to looking good: just talk to your supplier and resolve the issue. Like parents forcing two kids into a room to 'sort it out' the Gentle Reminders Club encourages the client to justify their reason for non-payment.

The Gentle Reminders Club is a free service to businesses who want to do the right thing. Businesses from all over the world are welcome.