Regardless the size of your business, the best way to keep a steady cash flow is to get paid on time. While this may seem like a no-brainer, many business owners still struggle to receive payments on-time.
If you’re spending more time chasing down late payments than scaling your business, then use these four strategies to get paid quicker in 2017.
Get Paid Upfront
This is typically best suited for larger scale projects. However, it’s a good practice to get used to. Your client most likely won’t pay you the full amount up-front nor should they. Instead, ask for a portion to be paid upfront so you can set a precedent early on that you expect a tight payment schedule.
Think of this as a retainer. If you can deliver in the end, you will earn your client’s respect and get your paycheck on time. If you don’t choose to get paid upfront, you’re giving your client reasons to argue or negotiate your price as you complete the job.
Be Aware of Timing
Like many things in life, timing is everything. Sunday is by far the worst day to send an invoice to a client. On the contrary, Thursday is statistically the best day to send out an invoice. If you’re sending interim or recurring invoices, make sure you’ve checked your payment terms crystal clear in the contract. Set reasonable deadlines and make sure your clients respect your schedule.
When you set your payment deadlines, don’t be afraid to ask for expedited payment. Invoices are given a 30-day window to get paid. Given 30 days, clients will usually pay the invoices within two weeks. Some business owners can’t wait two weeks for payment as it may cause cash flow problems. Ask for your invoices to get paid within 10-days. If you’re respectful with your ask and remain professional, your clients won’t have a problem paying you quicker.
When running your business, it’s important to use the right tools. As we move towards an entirely digital economy it’s definitely in your best interest to make the shift towards paperless billing. The most popular online payments solutions and payments platforms offer an online invoicing solution for small businesses.
It’s important to know how to send an invoice. Most of these platforms offer premade templates and guidelines that help you construct the proper invoice. In addition to keeping all your financial records in place these platforms allow you to easily track unpaid invoices and automatically send out reminders to late clients. Many platforms offer a free trial or demo so feel free to shop around a bit before you choose a service.
Following up effectively is a treasured skill in business. Unfortunately, you’ll likely need to follow up many times with several different clients. When and if a customer misses a deadline, here are a few ways you can follow-up:
- Send a Reminder: First, you should look to send a friendly payment reminder either by email or automatically via your invoicing software.
- Call your client: If your invoice remains unpaid after the first reminder, it’s a good idea to give them a call. Ideally, you can get your customer to complete the payment over the phone.
- Legal: If your client is still resisting, you can take legal action as a last resort. Make sure you maintain proper documentation, i.e. contracts or agreements, so you keep the legal fees to a minimum.
Running a small business is no easy task. The last thing you want to spend your time doing is chasing down clients for late payments. Use these four tips to get paid on-time and make more money in 2017!