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15 responses total.

One thing I've done is check with friends and see if any of them have done
business with that person.  

Another tactic is to have the person sign a letter of agreement with you. 
It protects you because it spells out what the task is and how each of you
will know when it's done. It also works a little like running newuser.  If
they have signed *something* they are less likely to want to contest your
claim that they owe you. 
 
Finally, try working on just a small project with them at first.  If
things don't go well (on either side) you can each back out without losing
much time, energy or face.  Sometimes, you just can't get in synch with a
client, and this saves them from having to make you out the "bad guy" and
badmouth you to other businesses.  

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I believe the Chamber of COmmerce and the Better Business Bureau (if there
is such a thing around ere) keep files of companies that have different kinds
of complaints against them.

#1 has some good points. The only thing I might add is that if all else
fails and the client is simply a deadbeat, small claims court usually works
well. 

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We contacted a "collection agency" person once in the past.  There was no
doubt that this guy was going to muscle the person to get the money.  His
quote was "It is not 'IF' I get the money, it is 'WHEN' I get the money."

The person quit two jobs and finally left the state.  This guy tracked him
to prospecting in the desert somewhere in the Southwest and finally threw in
the towel, saying it was not worth it.  We don't remember exactly what this
guy's percentage would have been, but I think it was VERY high, maybe 90%.

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In the #7 above, we garnisheed the wages of the person who owed us.
That' when he skipped his first job.  We then found out where he worked at a
new job (I called and asked for his forwarding address, using some deception)
and he quit his 2nd job. This person had an alcohol problem and would
threaten me when I asked for the rent.    

We had another incident in which we took people to court.  It cost about $600
in lawyers fees to collect $640.  (or something like that, I can't remember
exactly).  Next month it started all over again.

Both these cases involved chronic non-payment of rent.  (Honest, we're good
landlords.  We have one rental unit now and that has been all good
experiences)

#6: Collection agencies are useful to a certain extent. I have used them. 
    The truth of the matter is that if the deadbeat does not want to pay, 
    there is very little the collection agency can do. They'll take anywhere
    from 10% to 33%, depending on the circumstances.
  
    Depending on the deadbeat, small claims may be the end or just the
    beginning. If the deadbeat is a legitimate business, has good credit
    and is not paying because of a dispute, a decision in small claims will
    probably get them to pay. If the deadbeat is a professional deadbeat,
    small claims will just be the beginning because then you will have to
    execute the judgement. Collecting money on the judgement is a whole 
    other story. My feeling is that a judgement in small claims will get
    90+% of the businesses to pay.

#8: Marc was dealing with an individual. It's rather easy for an individual
    to be a professional deadbeat in this society. This country simply does
    not look harshly enough upon deadbeats, in my opinion. A business will
    generally not relocate because they owe $600 or whatever.

#9: If it was $640, you could have gone to small claims without an 
    attorney. As a matter of fact, if you had gone to small claims, you would
    not have been allowed an attorney.

Does anyone using a basic credit type application when granting clients
credit?  Like asking for their business name, address, owners name and three
credit references?  Would you be offenended if you were aked to fill an
application like this out before someone performed a sservice for you the
first time?

I've always asked for payment within 30 days of billing.  No credit, no
extended payment plans.  Or you could ask for a check at the time you
give them your product (report, whatever).  Often, a discount for paying
within 10 days will get a faster payment, but not always.  I've never 
had anyone ask me for a credit application.  Some have offered if I
didn't want to pay by check when picking up printing, etc.  

But for professional services like lawyers, etc, everyone has always sent
me a bill at the end of the month.  

I know I was quite thoroughly annoyed when my gas company decided to
demand photo ID for me to have gas service.

Presumably, you're doing a service which clients will need every month.
So for the most part, they probably will pay.  If they don't, they'll have
trouble getting a service they need on an ongoing basis.

I suspect that the hassles and costs of doing background checks could easily
be greater than the hassles of dealing with cases where clients won't pay.

I won a case in small claims court but the guy skipped town first.  He moved
often.  I was foolish enough not to check him out before signing a lease to
co-rent an apartment.  Prevention is the best medicine.  Also had two
translation agencies that did not pay.  One paid two years letter, the check
being enclosed with a large new job that they had not called about, and which
I recycled instead of doing.  The other agency was doing the translation for
a government agency, so I eventually wrote the agency asking for help
collecting.  I was paid shortly after and never worked for the place again,
even though they offered to paay 50% in advance (the other 50% would probably
never have been paid at all).  Like someone said, start small and build up
trust.  It is more difficult with out-of-state work.
        Bill frequently and stop working if you are not paid soon.  I know it
is hard for beginners, but try not to accept jobs from someone who seems
suspicious, or if you do and they don't pay, consider it part of your
education (but don't list them on your resume).

In my own small business (web hosting provider), I have a simple plan - 
Pay up or I take down your web page, change the password, and put up a 
new one that says why the old one was removed.

I haven't had anyone not pay on time yet. :)

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