All About Money & Business

This morning, I was bemoaning the fact to a friend, a small business owner, that my web site didn't have a formal policy statement regarding fees and collection procedures. And, if there was ever anything I didn't want to write about, that's it...but something needed to be written down somewhere for *gag* legal reasons.

As I talked about my approach, he was interested because he was having the usual billing and collection problems, and suggested I publish the gist our conversation as an ezine. He thought folks with a small business, or thinking of starting a small business, would be interested.

I also have a section on fee establishment and collection in my "Home-Based Business" program that is crying out for an update. So this will get me started.

Going back a few years, the part of my private practice I hated the most was the meddling of medical insurance companies who place themselves directly between the patient and doctor, causing a huge amount of hassles and expense. It was wonderful to divorce myself from those headaches.

Of course that leaves it up to me to establish and collect my own fees. In my programs, I act as producer, recording technician, publisher, and distribution/billing clerk. It takes an hour just to prepare a program for mailing, not to mention the long hours of writing, recording, and printing. So, there is a high cost per unit...but few "fingers in the till."

This makes possible the "interactive" nature of my programs. It also allows upgrades and revisions at a moment's notice, if necessary. Unlike my programs, mass produced programs must be warehoused in huge quantities some years in advance of sales.

To be profitable, the mass produced program must have a long shelf- life, and the authors are asked to refrain from discussing rapidly changing technology, or issues with litigation risks. Otherwise scientific breakthroughs and legal issues could make their programs obsolete...and stacks of unsold programs gathering dust in a warehouse.

As I first started formalizing the programs (now listed at the http://askcarl.net site) I wondered if I could ever get paid for all the work I was doing. I knew I would never be compensated for my years of education and training; I also knew I would never see a return for the R&D time (research and design), but since I have no plans to retire, I was focusing on a reasonable income and the freedom to live far away from an urban environment.

I think, when most folks start a business, the first thing they want to do is get Visa and MasterCard accounts. It's very seductive to imagine a customer or client typing a few numbers on an order form and have the dollars zip right into the ol' business account...instant money!

To me, however, it reminded me of the desire I had as a young therapist to participate with medical insurance companies--the patient has a monthly deduction at his work place and it feels like the treatment is free.

It looked and sounded sooo good, but in practice... well, that's another story. Let me put it this way: I never again want middlemen between myself and my clients. So, I long ago dumped the Visa/MasterCard idea along with the similar concepts offering automatic deduction in advance of services rendered.

I simply want to mail a program to a client and ask him or her to send me back a check. With a guarantee, this system protects the client from getting something they find they don't want (all they have to do is send it back) and keeps me away from the intrusive nature of financial institutions. So that is what I've done.

But of course, as always, there is a downside. It's a system based on trust, and there is a small percentage of folks that are not trustworthy. The obvious approach is to build into the fee schedule the "percentage of bad debts."

I've always hated that idea because it means the honest folks are picking up the tab for those who are not. I rejected the idea of the collection agency because, once more, that puts someone in the middle. If you have read some of my previous ezines you know I have little love for the bureaucracy.

Nonetheless, the best way to maintain the lowest fee schedule is to use the collection system followed by state and local Circuit Courts, that is designed to be facilitated without lawyers. Of course, someone can't be taken to a Maine Small Claims Court as a result of a debt incurred in Oregon. But the system's protocol can still be followed.

For more information, refer to my newest program: Turning Abusers into Victims. Here's one little added quirk. I believe in offering a 100% no-questions-asked guarantee. That guarantee can be a perfect loophole for someone who wants to get out of paying for a program. Once served with a collection demand, workbooks can be photocopied, tapes duplicated, and the original mailed back.

To avoid that, I am forced to add one "condition" to the "unconditional" guarantee. If you have received one of my billing statements you might have seen a handwritten note that says "Guarantee void unless payment is made by[date]."

I set a date with enough time for the client to evaluate the program before sending payment. Advantages:

- An easy billing system with no middle men
- Almost a 100% collection rate
- No add-ons for the honest folks
- Makes possible the 100% guarantee

Disadvantages:

- The time demands of the paperwork
- Frustration that such a system is necessary in the first place.

By Carl Weisbrod, Ph.D. email: askcarl@aloha.com http://askcarl.net