I was in a small 2 person company durniing the 90’s economic slowdown and their was a rule of thumb that 5% of annual invoices would never get paid. either outright stiffs, or work changes that wouldn’t get paid for, is that still generally true?
Yes it is still true but by using safe guards before the project, I have virtually eliminated deadbeats. I ask for 50% upfront deposit to start. Balance due before any CAD files are released to the client. Nothing happens without receiving the dough.
Do you mean to say your office would not pay 5% of invoices, or that 5% would remain uncollected by your office?
sometimes it meant small claims court. Often we just wrote it off hoping to get more work from them down the road…
Debt like that is usually a factor of size. 5% although it may seem relavitly small, is a large burden for a small office. t
Try to collect as much in advance as possible. Also to qualify customers using Dunn and Bradstreet or other means. Finally collecting as much in advance as possible is always the best bet.