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Jul 16 2017

How to get Clients to Pay On-Time

Let’s start off by admitting that as much as we love what we do, as small business owners, we do this to make money.

Let’s also admit that we have clients who have not really grasped this concept and who Just. Don’t. Pay. Us. On-time- or at all.

How do you deal with it? As always, prevention is better than cure. Here are my top three tips to getting paid on time.

 

  1. Get it in writing.

Relying on verbal agreements and handshakes is for amateurs, and you my friend, are a professional with bills to pay. State your fees and payment terms in writing so that you avoid misunderstandings about payment expectations. Your written contract should also include, at a minimum, a Scope of Work Clause which is a very clear, very specific description of exactly what you are going to provide to the client and a Cancellation Clause which will tell your client if and when they can cancel and what, if anything, they will still owe you after cancellation.

 

  1. Make it super convenient and easy to pay you

In your initial meetings, ask the client what works best for them in terms of timing of invoices, credit terms and payment type. Instead of just accepting cash and cheque, consider accepting credit and debit cards, online payments, direct deposits and email transfers. Paypal, Square, Quickbooks and Freshbooks are just a few companies which allow you to send invoices that clients can pay with just a few clicks.

You remain in control of the decision but by involving the client in the process and by being flexible in response to her needs, you make it more likely that the client will pay you on time.

 

  1. Create a structured, well-thought-out procedure for collections

Even with the most rock-solid contract and convenient invoicing systems, you’ll still occasionally have to deal with a client who doesn’t pay on time. When creating your collections system, think about:

  • How often you will remind your client to pay the invoice eg. every week, every month, every quarter and for how long will you send those reminders
  • Whether to add interest to the outstanding amount after a certain number of days have passed (pro tip- you should add interest because it acts as a deterrent to long delays in payment)
  • What escalation will you use if the client still doesn’t pay- eg. send the matter to a collections agency, retain a business lawyer or take the client to small claims court
  • How important is the client to you- using a collection agency or starting a court action often leads to a permanent breakdown in the relationship.

The first time you ask a client to sign a contract or you send out a collections letter may be nerve-wracking. But remember, while you might be new to this entrepreneurship thing, you definitely are not new to the service or product you are providing.

By insisting on a signed agreement and a collections policy that protects your ability to get paid, you signal to the world that you take your business seriously. When you take yourself seriously, guess what? Your clients take you seriously and serious people get paid.

 

Andrea Henry

Vox Law LLP

The Law Firm Built With Love for Small Business™

T: 416.639.6235

E: andrea@voxlaw.ca

W: http://www.voxlaw.ca

Sign up to receive legal tips I don’t share anywhere else and a must-have checklist for Canadian small businesses at  The Secure Startup.

This article is made available by Andrea Henry of Vox Law LLP for educational purposes only and not to provide specific legal advice. By reading this article you acknowledge that there is no solicitor-client relationship between you and Andrea Henry and/or Vox Law LLP. The article should not be used as a substitute for competent legal advice from a licensed lawyer.

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Written by Dwania Peele · Categorized: Andrea Henry · Tagged: Andrea Henry, clients, contract, on-time, payment, Vox Law

Mar 19 2015

Do you Qualify for a Fixed or Variable Rate Mortgage?

 

 Amina

Last week I was at the #CAAMP (Canadian Association of Accredited Mortgage Professionals) #Mortgage Symposium. The event happens once a year and highlights what happened in the #mortgage industry in the previous year and talks about the upcoming year and what we should expect.

It became very interesting when the #economist #Ted Tsiakopolous from #CMHC got up to speak. He spoke about the #Canadian #real estate landscape and provided #statistics. One statistic that was very surprising was the fact that only 30% of mortgages in Canada are #variable rate mortgages. So I thought this would make an interesting post.

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The first thing to note is the differences between fixed and variable mortgages. #Fixed rate mortgage – A #fixed rate mortgage is a mortgage where the #rate of interest and payment are fixed for a specific period of time. Generally known as the #mortgage term, it usually ranges from between 6 months and 10 years. As time goes on, more of the mortgage payment goes towards the #principal and less of the payment goes to the #interest. Furthermore, the #fixed rate mortgage is based on the #bond yield so as it rises, so do the fixed rates. #Variable rate mortgage – A #variable rate mortgage is a mortgage where the interest rate fluctuates with any changes in the lenders #prime rate. If interest rates go down, your mortgage payment will go down, but if rates go up, your payment goes up.  With some variable rate mortgages you can fix the payment and as long as rates stay below that required payment it will not change.  If rates rise high enough that you are not covering the necessary payment, your payment will be increased.

The important thing to note is that #qualification differs between fixed and variable and thus this is why it is only at 30% variable mortgages vs. fixed mortgages in Canada.

In a fixed mortgage, you will qualify at the #5 year fixed rate, which today is 2.73% and a 25, 30 or 35 year #amortization. The important thing to keep in mind is that with less than 20% down, you cannot qualify for an amortization greater than 25 years. The benefit of course with a #lower amortization is that you incur l#ess interest over the life of the mortgage.

Conversely in a variable mortgage, you must qualify at the #benchmark rate otherwise known as the #Bank of Canada #qualifying rate, which is currently 4.74%. if you remember only a few short weeks ago, the #BOC rate fell 5 #basis points after# oil prices also tumbled.

So which should you choose? Unfortunately it might not be up to you if your #GDS (#Gross Debt Service Ratio) and #TDS (#Total Debt Service Ratios) are not in line for qualifying for the Variable rate. Most “A” lenders look for a ratio of GDS – 32% & TDS-40%. “B” Lenders are more flexible but you will incur higher rates.

When I do a purchase analysis for my clients, I look at both options and present the pros and cons of both fixed and variable. I take into account my clients current monthly obligations, their current lifestyle and what they can afford.  Fixed or variable, it comes down to affordability and qualifiying. Don’t forget if you, a friend or family member have any questions about mortgage financing I’m here to answer those questions and to work with you to arrange the best product to fit your specific needs and comfort levels.

To your Wealth!

Amina

Please “like” my facebook page here Please follow me on twitter here

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Written by Dwania Peele · Categorized: Amina Mohamed · Tagged: A lenders, Amina Mohamed, B lenders, business development, Business Woman, CAAMP, Canadian, Canadian Association of Accredited Mortgage Professionals, Canadian Small Business Women, CMHC, DS, economist, entrepreneur, fixed rate mortgage, fixed-rate, GDS, lenders, Morgage Symposium, mortgage, mortgage rate, mortgage term, payment, rate, small business, small business development, TDS, Ted Tsiakopolous, variable rate, Variable rate mortgage, variable rate mortgages

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