1. Call AP: Cooler heads prevail, so be professional and calm. Instead of calling into your primary contact, call the main office line and ask for Accounts Payable. Usually a simple inquiry can determine if your invoice has been approved for payment and submitted. If they have no record you’ll need to go back to your primary contact. If they do have a record of it, ask when the check will be processed. Some companies have long payment cycles, so you might be stuck in a holding pattern, but at least you’ll know that you will eventually be paid for your services.
2. Follow-up regularly: If your invoice has not made it to Accounts Payable call your primary contact again and ask specifically who you should talk to about getting your invoice approved for payment. Follow-up with the same message in email to document your conversation or voicemail. Be firm, factual and reference any legal agreement you have in place that specifies your payment schedule. It is worth asking if there is any problem with your work. Set a reminder in your calendar to call back/email in two days. Try also calling during off hours (early in the morning or after 5:00 pm) or even their mobile phone if they travel for business often.
3. Send a letter from your attorney: If your client is no longer responding and it has been months since you expected payment, you will need to be more forceful and send a letter demanding payment or face legal action. There could be still be a reasonable explanation, but the likelihood of future business is unlikely so you should focus on simply getting paid. A letter from your attorney addressed to your primary contact, the senior-most person in that department and the attorney for your client will get their attention.
4. Tell the world: In today’s connected world, there are more and more places to express any dissatisfaction with a business. Tell the Better Business Bureau, websites like Yelp and Cortera allow you to post online reviews about your experience. Businesses monitor their reputation online carefully so a few negative ratings across the major websites might just get their attention and you eventually paid.
5. Take them to court: As a last resort you can take them to small claims court. Most small claims courts allow you to represent yourself in court. Small claims court is also very informal making it accessible to anyone.

1. Lawsuits are a matter of public record. Before agreeing to provide services, you can check your local courts to see if your potential client has been sued by a fellow freelancer or other vendor. Many jurisdictions make their court dockets available online.
2. Conduct a background check on your potential client. Entry level business credit reports can be purchased online with a credit card from bureaus like Cortera and others. These reports outline the business’ payment history and help predict future payment behavior.
3. Check the various websites that rate local businesses like Yelp, Google Local and Yahoo Local. Look for negative reviews and ratings as a potential warning sign. A simple Google search can also reveal quite a bit about a business.
4. Ask your peers on social networking websites like Facebook, LinkedIn and Cortera (shameless plug for Cortera Circles – but hey it’s a free and all about sharing payment experience on businesses so worth a look!)
5. Don’t perform any services without first getting a written contract in place with your client. Among other things, the contract should spell out, with particularity, the services you have been retained to perform, the amount you will be paid, when you will be paid. For artists, designers, or other technical and creative freelancers, you should ensure that the contract protects your intellectual property rights. A small investment in legal services could save you down the road.There are even free contract templates that can be downloaded from the Resource Center of elance.com.

If you follow all of these precautions and still don’t get paid, you can sue your client. Most small claims courts allow you to represent yourself in court. Small claims court is also very informal making it accessible to anyone. And don’t be shy about using the above websites to share your experience with others – your rating could save another fellow freelancer.

I’m not a lawyer so here is the standard warning: The recommendations set forth herein are not a substitute for legal advice. You should speak to an attorney licensed in your jurisdiction if you wish to obtain legal advice about these matters.

Have another tip? Drop me a comment.

Here are just a few examples of Circles created by members since we launched – all sharing their credit risk experiences:

• “HVACR” Circle – A Group for the heating, air conditioning, plumbing and refrigeration industry.
• “Manufacturing & Distribution – Heavy Duty Truck and Trailer” Circle – A group for manufacturers and Distribution of Truck and Trailer parts for new and pre-owned trucks and trailers, both over the road and off-road truck and trailer equipment.
• “Sign Manufacturer” Circle – A group for the manufacturers of architectural signs.

I can’t help but think back to September 2009 when Cortera launched a community-based alternative to business credit reporting. Aimed at small businesses, who were often neglected from the credit reporting process, the service combined credit data with familiar social review and ratings functions — quite literally encouraging a crowdsourced approach to credit reports. The service became an instant hit with the press and a game changing, if not controversial, development in the 100+ year old business credit reporting market. With yesterday’s launch we are building on this successful community foundation while transforming risk management tools from static information solutions to dynamic, real-time social circles where people can share information. Traditionally organizing risk professionals into groups has been limited to the largest organizations. These groups, while highly useful in sharing credit information, meet only a few times per year and lack the efficient movement of risk information required to fully exploit the group’s organization.

The solution: Cortera Circles – A social extension to our platform that brings the tried-and-true – but often exclusive – concept of local and industry-based credit groups to the Web and the masses. Delivered as a free service, in a streamlined form, Circles can be created around a company, an industry or even project or job site–with each supplier and service provider providing their own unique perspective for ultimate financial transparency.

Create your Circle today and start getting the real-time insights you’ve always wanted from your most trusted peers.

Think of Circles as LinkedIn meets business credit reporting – the ease of joining a LinkedIn group meets the sharing of real deal/hard numbers of an offline credit group. Have a question about a business who you are about to extend credit? Now you can ask your peers with your own credit Circle. In just a few minutes you can create and invite your business friends and best of all it’s free to use and open to anyone. Need insights outside of your own network or entering a new market, simply browse the many existing Circles to the tap intelligence of thousands of others.

Business credit reporting, risk management tools and systems are hardly new – Cortera itself is one of the more successful providers of such solutions. But to date, such solutions run algorithms, business rules, and static, structured data feeds to help companies more efficiently identify risk. Cortera Circles will, in contrast, thrive off of ongoing and ever changing contributions and sharing between like-minded businesses. This dynamic information will be exclusively crowdsourced. Microgroups will serve the immediate needs of localized and project-specific audiences to provide insight into risks that are hyperlocal in nature and far too specific to be accurately addressed by traditional solutions. Today’s report-based solutions as point-in-time snapshots that immediately age—a result of decades old technology that has evolved little despite the social web’s impact on nearly every other aspect of business. In contrast, Cortera’s group sourced approach delivers a live risk assessment, continuously updated by the community.

Have a question about a business’s ability to pay their bills in a timely manner? We make it as simple as asking your Circle.

We are on stage during the first session: 8:30 – 9:45 AM.  Our group includes MoneyAisle, Fiserv, Wikinvest, Worklight, Visa, oFlows, eRollover, Bill.com and Cortera.

Stay tuned…we reveal what’s new from Cortera tomorrow morning.

“I think there should be a website where independent contractors can rate how well or how poorly a company pays. Big companies decide how credit-worthy another company is by going to look at a Dun and Bradstreet report. But what about you as the person who’s working on your own, serving at the pleasure of this non-employer, and they stiff you? We need this for those working as freelancers. That’s how capitalism works. A need is met in the marketplace and your reward for it is money – a real paycheck!!”

Clark is spot on in identifying this need. Freelancers, unfortunately, too often get the short end of the stick when it comes to payment. It’s time we bond together and change that. It relates directly to our company’s mission.

Cortera has built the first true online community where small businesses, freelancers and anyone can check in real time who’s getting paid and who’s getting delayed, or worse yet, stiffed. They can even report the deadbeats to protect the entire community. Check it out http://www.cortera.com/community/. Best of all, it’s free to join.

It’s time that the “little guy” in business has a say and gets heard.

1. Have the most delinquent companies (those paying at 90+ DBT), many of which have outright failed, simply been flushed out of system? In other words, are all business simply benefitting from less drag and write-offs?
2. Given the scarcity of credit, is it possible to maintain such payment behavior AND invest in growth and expansion (e.g. hiring new staff)?
3. Are the largest and most critical suppliers forcing smaller partners into increasingly less favorable payment terms?
4. Have large businesses substantially slowed their payments to their smallest partners, thus putting increased pressure on Main Street to make up the difference in working capital?
5. Are small businesses, increasingly cognizant of more stringent credit conditions proactively improving their credit ratings in the hopes of securing near-term lending?
6. Are we witnessing the emergence of a more risk adverse culture among entrepreneurs where opportunity is being weighed against predictability to ensure optimal working capital?

While a blog hardly constitutes a scientific survey, we’d love to get your insight and opinion. To what do you attribute the stabilizing cash flow?

With that in mind, here are five simple steps every company should be proactively taking in 2010 to put themselves in the best possible credit position:

1. Establish a credit file at the major credit bureaus. Many years ago there was only one major bureau – Dun & Bradstreet. Today the business credit reporting landscape has changed, so make sure you establish a credit file at ALL of the major bureaus (Dun & Bradstreet, Experian, Equifax and Cortera)
2. Get your suppliers involved – they’ll love you for it. If you are financially healthy and meeting your own profitability goals, your suppliers and vendors will obviously benefit as you grow and thrive. Encourage them to report to the major credit bureaus (see above) so that you get credit (no pun intended) for regularly paying your bills on time.
3. Pay your vendors and suppliers on time – it might even save you money. Sounds simple, but if you are not paying your bills in a timely manner it will negatively impact your business credit report and will eventually hurt your ability to obtain business credit in the future. Many vendors also provide discounts if you pay early, so if you get in a cash flow habit of paying before the invoice is due, you’ll often save 2% or more off your invoice.
4. Communicate, communicate, communicate. Whether you are extremely profitable with plenty of cash on hand or struggling to pay your next invoice, keeping your suppliers in the loop goes a long way in negotiating your terms – and keeping a positive credit history intact. Never go completely dark and stop returning inquiries. And never stretch out payments without being up front and transparent with your suppliers as to why you may need to pursue such a tactic. This will alienate your suppliers, lead them to cut you off completely, or worse, encourage them report such delinquencies to the major credit bureaus. Lack of transparency will handcuff your business and potentially cause you even more pain.
5. Monitor your own credit report. Just like you monitor your personal credit report, you should do the same for your business. Small discrepancies or disputes can mean the difference in receiving business credit or being denied.

So if confidence is not behind the improving payment behavior, what exactly IS driving down delinquencies? While it’s hard to point to a specific answer in the data – and while one month hardly constitutes a sustainable trend – here are a few possible contributing factors:

1. Deadbeat Darwinism: We’ve said it before and we’ll say it again. The best way to ensure timely payments is to report, proactively deal with, and do the proper reference checks to avoid deadbeat clients and partners. With growing sensitivities to such risks and forums like our own Cortera Credit Exchange, which make it easy to ‘out’ such delinquents, small businesses may taking the necessary steps to avoid such problems. Serial deadbeats and companies in trouble are therefore less and less likely to be mucking up the system.
2. Past due debt off the books: Another flavor of deadbeat Darwinism, but this one at the tail end of the cycle. With little or no hope of recovery long outstanding debt – overdue bills – well past 90 days DBT, many businesses simply write it off. Thus, this delinquency data is no longer weighing on the average.
3. Improved credit management: Perhaps business owners are more sensitive to increasingly stringent lending conditions – and how business credit reports are built – given the notoriously risk adverse position and tight lending habits of banks these days. Maybe they’ve taken our advice and realized that the best way to self manage working capital in the absence of abundant credit availability is to ensure that they and their partners all pay their bills in a timely manner, thus optimizing cash flow throughout the entire system. Regardless of the reason, we may be witnessing an increasing emphasis on better credit management habits for Main Street.

As always, another month’s worth of data will go a long way toward sorting this out. But in the meantime, what do you think is contributing to a sudden improvement in timely payments? We’d love to hear your thoughts and ideas.