Getting paid on time is crucial to the survival of any business, in any field, of any size, anywhere in the world, no matter who you are. For small businesses, in particular, it could be the difference between covering costs and going into the red. Luckily, if you or your business have ever experienced issues with on-time payment, there are proven ways to get invoices paid faster.
Make the Process Simple
You’re not responsible for making your client’s life easier, but it sure does help things run more smoothly. Perhaps before you make a meal of lagging clients, consider how you can help them help you. Make the payment process as simple, straightforward and seamless as possible…
Use software tools
There are plenty of digital platforms out there, designed specifically to help you do your business better. Accounting software like Quickbooks and Freshbooks have built-in features to help you keep your invoices straight so that you can get them out and get them fulfilled more promptly.
Be flexible with payment methods
Clients have their own idiosyncrasies, their own way of keeping their books straight and sending out payments. Maybe they manage all their finances on one online platform. Maybe you can get paid faster with direct deposit, but they’re just more comfortable writing checks. If your priority is to get invoices paid faster, be flexible. Money is money is money.
Establish a payment schedule
If the nature of your work allows for it, a prearranged payment schedule can standardize and simplify the process of invoicing both for you and your client. Schedules can be established via verbal agreement, or automatically via software tools.
Build in Incentives
Once you enter into a contract with a client, they are legally obliged to pay for your work product. They aren’t, however, obliged to make your life easy. Without specific, written precautions against late payment, all you have to rely on is the character of the person at the other end of the line, and their organizational acumen, to get your money on time. If they forget, if they’re experiencing financial problems, or if they simply don’t care to pay you on time, you’re out of luck. So, rather than rely on the professionalism of your client, you can establish safeguards: incentives that reward your client for timeliness and punish lateness. Depending on the nature of your business, and your relationship with the client, you might want to…
Get a deposit upfront
Depending on the nature of your work, an upfront payment can lend you a certain amount of security, while dually incentivizing your client to meet the requirements necessary to not let that payment go to waste.
Set (reasonable) deadlines
Deadlines are an effective tool for organization and time management. “Your payment is due soon” holds much less weight than “Your payment is due within three business days.” Keep in mind that clients have their own way of doing things, and may need time to meet your needs. Deadlines must allow for a reasonable amount of time to act, so that you’ll have just reason to raise concern if they’re not met.
Institute late fees, or hold on to work product until payments are made
Punishing your client outright for not meeting due payments comes with a risk. Refraining from delivering your end of the bargain because you haven’t yet been paid, or charging extra for the delay, can encourage prompt action. It might also alienate your client from you, and create a hostile working partnership. There is no hard-and-fast rule here, so you’ll have to weigh the benefits against the drawbacks. Either way, retribution should be withheld from all but the most problematic of clients.
Keep Open Lines of Communication
The relationship you maintain with clients is transactional, yes, but also personal. We all know, inherently, that it’s much easier to ignore someone you don’t see every day, to reject someone if you don’t have to look into their eyes. By the same token, it’s much less taxing to pay a bill late if the entity you’re sending the check to is faceless. You wouldn’t feel bad paying the electric company a few days late. But your local baker? A family member? There are plenty of logistical, measurable ways to get your invoices paid faster, but building and maintaining relationships just may be the X factor. When you’re doing so, make sure to…
Be clear on terms
Ambiguity is the enemy of productivity. Include clear, defined terms of payment in a contract, and reinforce those terms if they ever come into question.
Don’t be shy about reminding your clients to pay your invoices. If you do so within reason, they may even thank you for it. You can send an email, a letter, call or set up automated reminders via software. What to do when a client doesn’t pay? In those more extreme circumstances, legal action may be a necessary last resort. Alternatively, if following up yields no results, you could try invoice factoring. Just as businesses sell debts to collectors, you could sell off unpaid invoices en masse, in exchange for immediate payment of some fraction of the total sum.
Set the Standard
Whatever you ask of your clients, you must first embody yourself. If you don’t treat them seriously and with respect, you shouldn’t expect it to come your way. If you’re professional, prompt and courteous, you’re more likely to see that behavior reciprocated. You’d be best advised to…
Be prompt yourself
If you want to get your invoices paid faster, then get what your client needs out to them faster. Send your work out faster. When it comes time to invoice, send it out right away. Clients are more likely to forget about you or take on other priorities if you allow yourself to fall into a distant memory.
Keep your records straight
If your small business deals with many different clients, keeping your books neat and tidy is crucial. Otherwise, data is liable to become jumbled, and late payments get buried under more recent activity. Suddenly your problem isn’t just that you haven’t gotten paid, but that you’ve forgotten that you haven’t gotten paid. Maintaining your records will prevent headaches, and allow you to more effectively keep up with individual clients and their needs.
Be friendly but firm
If you’ve had bad experiences with delinquent clients before, don’t let that cloud your judgment. If you haven’t, don’t think you won’t. Approach everybody with positivity and respect, but not to the point where you can be pushed about. Friendly, but firm. Allow clients a safety net, if they encounter issues that cause them to be late on a due payment. Don’t allow lateness to become a pattern.
If you want to know how to get a client to pay an invoice, remember that it’s not a scientific matter. You’re dealing with people. Make their lives easier, incentivize prompt payments, keep up communications and model good behavior. That is, really, all you can do.