If you’ve been in business for any given amount of time then you know it’s your job make sure clients pay on time.
You also know how frustrating it is when clients don’t pay. Be it that they pay late, lose an invoice, conveniently forget or simply disappear off the face of the earth, it can be very frustrating to run a business when you’re experiencing this kind of cash flow problem.
Here are some strategies you can implement to make sure you increase your chances of getting paid in a timley manner.
Put late fees in the client agreement – and enforce them!
Nothing makes people shake in their boots like having to cough up more money. That’s why if you want to make sure your clients pay you, you may have to start implementing late payment fees.
How much a late payment fee is and when it goes into effect is up to you, but the point is to use the fear of an extra fee to your advantage so that your clients actually pay on time.
Stay organized with your invoicing.
As hard as we try, sometimes we’re too busy running a business to stay on top of who owes us money. Before we know it we’re forgetting to send invoices for work we’ve done. That’s why it’s important to stay as organized as possible with a service like Due or by bringing on an accountant.
Some people even take it a step further and also keep a written record of what they’ve invoiced and for how much. This is in addition to using online tools and outsourcing. This helps some individuals keep better tabs on the financial situation and reminds them to send follow-ups if necessary.
Outsource the payment follow-up emails.
Sometimes things really do happen that keep clients from sending payments on time. For example, if you have corporate clients then it’s very likely that there will be a payment lag come the holidays because the entire accouting department is out of the office.
Even weather can get in the way of payments. I once had a client who was unable to send a payment on time because the city of Boston was covered in snow and everything was closed.
The point is that not everyone is trying to skip out on paying you and that sometimes life really does get in the way. That’s why it’s up to you to send follow ups to make sure these clients pay up as soon as possible.
Of course, who actually has time to write those emails? Fortunately, it’s something that can be delegated to someone like a virtual assistant.
Ask for a portion of the payment upfront.
Several types of businesses ask for a portion of their fees upfront in an effort to make sure clients pay them. Some businesses won’t even start doing any work until they receive a deposit.
This strategy ensures that if the client conveniently disappears later that they can at least pay their bills. This doesn’t work in every kind of business and it may not work with every client, but it is worth a try. You’d be surprised at how many people are okay with paying for a portion upfront.
Send invoices twice a month.
How many business owners only invoice at the end of the month only to have a situation where they don’t have any money because they’re too busy waiting for everyone to pay them?
You can avoid this stressful scenario by sending invoices more often. For example, instead of sending invoices the 30th of each month, invoice them for the work done for them in the beginning of the month on the 15th and then invoice the rest on the 30th. This also lets clients know that you are serious about making sure they pay you.
Start taking payments online.
I once had to convince a coaching client to start accepting payments for her business online. She was still having her clients send her paper checks because she didn’t want to deal with processing fees. Needless to say she heard a lot of “The check is in the mail” excuses.
In a time when it’s so easy to accept and make payments online, it would be a bad move to not accept this as a form of payment in your business. In fact, many of your clients would probably even prefer it because it will take them less time to actually get a payment to you.
If you’re worried about processing fees consider this: it’s much better to lose a small percentage of earnings to processing fees (which are tax deductible anyway) than to lose an entire payment because a potential client thought it was too difficult to pay you.
Once again, this may not work with every client. However, it’s still wise to have as many clients paying you online as possible.
In reality, it’s not that hard to make sure clients pay on time. It’s just that a lot of it depends on you setting boundaries, staying on top of the financials and making it as easy as possible for people to pay you.