When you have to discuss the financial side of a business venture, commission or partnership with clients, what comes up? For some, nothing extraordinary: these people are confident about communicating their worth, express it clearly and move on. For others, it’s not so simple. Feelings of shame and embarrassment usually reserved for the most awkward memories from high school can surface, prompting them to avoid having the conversation altogether. And when it comes to discussing late or missed payments, these feelings only get worse.
Some might see getting underpaid, paid late or not at all as a rite of passage when you work for yourself but writer and podcaster Emma Gannon wants to see this change. Though now a bestselling author of several books (including one on building a multi-hyphenate career and another on self-sabotage) and host of the award-winning podcast, Ctrl, Alt, Delete, when starting out on her own, she had her fair share of payment challenges.
“I remember one situation where I was ghosted. I was chasing an invoice for thousands of pounds but didn’t hear back from them for about three to six months,” she recalls. “I didn’t even receive a response saying, ‘we’re sorry, we’re going to have to pay you late,’ I was just ignored. It was a massive worry and I can see how people end up having sleepless nights about things like this. It’s impacting people’s mental health and we need to call it out.”
Gannon has partnered with GoCardless – a fintech company that helps businesses and sole traders set up automatic payments – to bring light more light to the issue, in particular to their latest research, which shows that, despite the mental turmoil these issues can cause, 38% of British SME decision makers feel awkward chasing customers for late payments and 73% would be willing to lose 10% of their annual revenue just to dodge the conversation altogether.
This is particularly prevalent amongst women, with 44% indicating that it was “too awkward” to chase payments compared to just 35% of men. When asked why they felt this way, over half (54%) stated that they don’t want to appear rude. This is in contrast to just 40% of the male SME decision makers surveyed.
Even though British people are known for being more ‘reserved’, the fact that so many of us would be willing to forgo some of our income just to avoid talking about payments begs the question: where does this culture of ‘money muteness’ come from?
“Big businesses know that you need them and that it’s in your interest to have a great relationship so that you don’t endanger any future work. It’s an exploitative power dynamic,” Gannon says.
And whilst this isn’t solely a women’s issue, Gannon feels that more female SME leaders find it difficult because, societally, we have been denied the same level of financial literacy as men which, in turn, has led to a lack of confidence. “I wasn’t taught about money at school and didn’t talk as much about it as my male friends did. I know it was the same for a lot of my female friends, who still find this topic tough.” Because of this, she explains, “there’s this underlying fear of being seen as difficult – something that I have been called before.”
Having built a successful creative career in which she speaks openly about the challenges faced by the self-employed, Gannon has learnt a thing or two about how to overcome the fear of talking about money.
“I’ve now completely transformed my relationship [with money] – my business runs smoothly and I don’t have any problems with getting paid. But that’s because I did the research and really learnt what set-up I needed to have. And now I want to share that knowledge with other people.”
Here, Gannon shares her advice for ensuring you get paid on time, every time.
Create a barrier between you and your payments
“Invest in the technology, assistance or the tools that will automate payments for you, such as GoCardless” Gannon suggests. Or, if that’s too expensive for you right now, she advocates setting up another email address under a different name to ‘act’ on your behalf. “Essentially, anything that stands between you and the client creates that distance.”
So even if it’s you behind that ‘assistant’ email, for the client to deal with a person or system that’s working on your behalf creates a healthy boundary and takes the pressure off.
Or, if you feel you’d fall into that group who’d be willing to lose 10% of their income to avoid awkward money talk, “invest that money back into your business so you can live your life and be happy.”
State your payment terms
Rather than waiting for a payment to come in late, then feeling embarrassed to chase it up, Gannon advises making it clear up front how you expect to be paid. “You can put this in small print at the bottom of your invoice, but I’d suggest actually stating it strongly in your emails during the discussion of the work – several times if you have to so that it sticks in people’s heads.”
She also recommends shortening the payment term from 30 days to 14 or even less. “The stronger you can go in, the better.”
Ask for at least partial payment upfront
There are certain professions in which we would never expect to receive a product or service before any kind of payment, yet many of us accept this in our own businesses.
“I now always get paid 50% upfront,” Gannon says. “I know a lot of people are afraid to ask for this, but if you don’t ask, you don’t get.
And if you’re uncomfortable with that, she says, it’s just as valid to ask for less. “Even a 5% upfront payment will boost your confidence to settle when you’ve done the work.”
Charge for late payments
The UK government recommends charging 8% in statutory interest if your payment is late and Gannon recommends highlighting this to clients when payments are due but are yet to appear. “If you use the proper language stating this as a policy, rather than just your own preference, it’s much harder for them to fight against,” Gannon observes. “And if they push back, point them to the government website.”
Do it consistently, rather than sporadically, to build confidence and create a habit.
Much of the discomfort around discussing money comes from believing that we’re talking to faceless companies, rather than real people. “Especially amidst the pandemic, we’ve entered a world of emails and Zooms and it often feels like we’re not talking to each other properly,” Gannon states. “I think honesty counteracts this.”
Though it might seem obvious, simply remembering that it’s a human being who has most lightly dealt with their own money issues at some point in their life behind those emails can help you build a connection that’s more conducive to honest conversation.
Avoid doing work for free
Small business owners and freelancers – particularly those in creative fields – are regularly asked to do things for free in return for ‘exposure,’ as there’s an underlying belief that work that, from the outside, is considered ‘fun’ doesn’t deserve to be financially compensated. Gannon is against this.
“We really need to step away from the stereotype that being a creative person is a hobby. If we accept not being properly paid, it’s going to continue to be mostly privileged people who can afford to work in these industries.”