They say that death and taxes are the two things in life that none of us could ever escape. For real estate brokers and agents, it seems fitting to add a third one: delayed commission.
Working on a 100% commission basis, just like many independent real estate brokers, can be very rewarding, especially when a deal has just been closed and payday is nigh. However, it can also be frustrating. Especially so in the Philippines where delayed commission or payment seems to the rule rather than the exception.
There’s nothing more upsetting for brokers than a slow check or a delayed check, said Teresa Boardman, a broker based in St. Paul, Minnesota. “No one likes to fight to get paid for the work they already did,” she said.
Boardman said that often a delayed commission check is the result of procedures designed to make someone else’s job easier—a constant reminder that in business, people are rarely put first.
One excuse so overused that it has ceased to become reasonable is that the people whose signatures need to be in your check are not around. (Really, how difficult is it to get them to sign a check?)
Boardman added that in order for a brokerage firm (or a developer) to recruit and retain hardworking agents is to make sure they are paid on time. Many agents work for free for weeks, months, and sometimes years to sell a single property and earn a single check. To delay payment for weeks after a successful closing is just cruel.
So how does one deal with nonpaying clients? W can think of five ways.
1. Devise a Payment Process
If yours is a one-man business (as in the case of many independent licensed brokers), have a clearly defined process and policies for dealing with late payments. As chasing money is time-consuming, a process in place will help you preserve your sanity and profitability.
2. Contact the Client Immediately
On the day payment becomes overdue, contact the client (or the company’s authorized representative) immediately. Do not email—we all know where emails eventually end up in. Instead, a telephone call or a face-to-face meeting is far more effective. During your conversation, ask whether there have been any problems with the paper work and ask when the payment will be made and agree on a date.
3. Nudge the Client Harder until You Get Your Payment
If you remain unpaid, contact the person directly responsible for paying invoices. Perhaps the company simply has a payment schedule that’s different than yours. This will allow you to adjust yours and in the process will give you a chance to build a relationship with another person in the company. Be persistent—a casual stop by the client’s office may also do the trick (“I was in the neighborhood and thought I might as well stop by to follow up on my check”). The client will soon be dreading the embarrassment of your visits or regular calls.
4. Prepare to Do the Inevitable
If all these tricks fail, there’s one thing you should never be: your client’s doormat.
According to Geoffrey James, a contributor to Inc.com, some small businesses who are afraid of losing a big client usually end up being pushed around. No self-respecting small-business owner wants to end up like this.
In order to prevent this, said James, you should be totally inflexible in demanding what’s legally yours. He cited his own experience with a big client who stopped paying because of financial problems. When he got fed up after months of polite letters, he had his lawyer send them a letter threatening legal action. He was immediately paid everything he was owed, plus 10 percent extra. And he didn’t lose the big client. The lesson here: if you let a customer use you as a doormat, they’ll continue to use you as a doormat.
5. Never Badmouth Your Client to Others
More like an advice on what not to do while waiting (and demanding) for your check—never complain about a nonpaying client to others, especially on Facebook or Twitter. This is not only unprofessional but is also guaranteed not to result in a positive outcome. Being antagonistic may ultimately end your relationship with your client, and won’t necessarily resolve the payment issue.
