Getting Paid
People will pay for something they want or need. After it's delivered, they're much less eager to remit. Therefore, collect your fees up front.
Individuals as Clients
Get paid first! Require a retainer and a signed agreement. Perform casework until the money is expended or the case has been completed. Return any remaining funds. If the case remains unresolved and the client wants to continue, accept another retainer. It's just good policy; stories of nonpayment are numerous.
When people desperately want to find someone or need information or surveillance, they're likely to commission work far beyond their ability to pay. While client motivations may not be malicious, the result is still disastrous for everyone.
It can be easily prevented by operating with funds up front. Not only does a retainer keep your business in the black, it prevents the client from overextending himself when he is in an emotional state and prevents ugly collection situations. This doesn't mean that investigators don't perform pro bono work — many do — but only when they choose the cause and can afford to give away the hours.
Protect your business first, and you'll be capable of helping those who really need your help. Always require a signed client agreement.
Business Clients
If possible, collect retainers from business clients. This is more difficult than collecting from individuals. Businesses are not accustomed to remitting payment in this manner and some view the request for retainer as an affront. However, if you're successful in making this arrangement with a business, be explicit about how and when you'll be paid. A written contract protects you both, so don't hesitate to pull one out and fill it in — then get a signature. Without it, there can be problems.
Don't let payment become an issue. If you must write letters and make phone calls for payment, you've probably lost your client. Avoid such uncomfortable situations by using a prearranged, written, and signed agreement. Of course, the only real way to prevent the necessity of hounding your client for payment is to receive a retainer before beginning work.
For example, after receiving the initial retainer, if you haven't specified in writing that you'll continue to work according to monies retained, you might have to settle for the remainder of your fee after the job is complete. Doing this places you in a negative position from the outset because expenses must be paid during the investigation.
Attorneys understand retainers and should be willing to hire you as a contract employee according to these terms. After all, they require retainers in much the same way.
You'll almost certainly run into the business client who won't pay up front. Before deciding whether to accept the case, ask agencies in your area about their policies. If the climate is conducive toward billing business clients (risk assessment companies particularly like to be billed), you might decide to take the job, but be sure to ask about the payment timeframe. Insurance risk assessment companies are accustomed to being presented with investigator information, so don't hesitate to present your qualification to them. Many will take a chance on you, especially if they're unhappy with their present investigator.
If you decide to bill, set up a regular billing date. Be aware that many firms pay bills once a month, and almost none pay upon receipt of invoice. Furthermore, large firms often take longer than small firms to pay. The most common reason for this is that invoices must pass through several hands before the person with authority to cut your check is authorized to do so.
However, you need your money. You've expended time, gas, and perhaps travel expenses for hotels and meals, and your monthly overhead just keeps coming due whether your large company has paid or not. You may have also paid investigators.
As a private investigator, you will have a large number of receipts and bills you need to keep track of.
To receive payment quickly, offer a small reduction from the invoice amount. For the client, even if it's not company policy to take advantage of a reduction, it's an attractive incentive. Introduce a 2–5 percent reduction for payment within a reasonable timeframe, perhaps fifteen days. Most businesses will oblige. This reduces your income slightly, but it greatly increases your cash flow, which is at the heart of keeping your doors open. Never forget that thriving businesses have been forced to close because of cash flow problems.
Work with an accountant to determine which billing method is best for you. Also, ensure that invoices and everything you send to the client appears professional. Microsoft Word, WordPerfect, and many business software programs such as QuickBooks provide invoice templates that can be customized. QuickBooks does the math for you and keeps up with income and expenditures. If you sell products on the Internet, QuickBooks will integrate with some Webhosting firms.
Preprinted forms can also be purchased at most specialty stores such as Target, Best Buy, Staples, Office Depot, and Office Max. You can also find them online.
Keep your fees equitable. Don't raise your regular fee 5 percent for Mr. Large Corporation only so you can offer to reduce his bill by 5 percent on the invoice. People talk. Keep your reputation untarnished by charging everyone a fair fee — the same fee. Should you decide to offer such an incentive to every client, figure it into your regular charges beforehand.
Collecting Payment
Most investigators prefer to deliver the bill in person for several reasons. The first reason is that this business is all about relationships. You want to touch base with your client, visit a short time (don't waste her time, nor yours), and cement your relationship.
The second reason is for you to leave with your fee in hand. It's difficult for a client to put you off when you're standing in front of her. Many things can delay your payment if you mail the bill, including winding up in the “to be paid” pile and subject to someone else's payment schedule. Cash flow is extremely important in this business, so you don't want this to happen.
One more point about the bill: Itemize it. Don't expect a client to be satisfied with a large lump sum. Explain where his money was spent — gas, other investigators, phone calls, and any unusual expenses. Also, don't pad your bill. Treat your clients as you would like to be treated. Clients often discover padded bills, so don't take the chance.
