Keep These Things in Mind if You Want to Get Paid Faster
Getting paid is an important part of business, but not necessarily the most fun part. Invoicing is not a fun job when you have so many other things on your plate. Still, when you’re a small business owner, getting paid can sometimes be a big battle. Efficiency is key when sending and managing your invoices.
Your strategy is important. Here are a few tips on managing your invoices to ensure you get paid in a timely manner.
Know the Billing Cycle
While it would be a treat if your clients followed your billing cycle, that’s not typically the case. When dealing with larger clients, they may pay on 30-, 60-, or even 90-day intervals. When working on-term with a client, the most common type of invoice will be a recurring invoice.
With a recurring invoice, you and your client will agree on the frequency (weekly, bi-monthly, or monthly) and then you can set your invoices to automatically bill at the agreed upon billing cycle. Once your clients get into this routine, you will get paid much more quickly.
Use online software
Go paperless. In 2016, this should not even be a choice, but going paperless will guarantee you get your money faster. You will be hard pressed to find anyone who doesn’t want their invoice sent online.
Here are a few examples of online invoicing tools. Any one of these options is great. It’s all about preference and if you want to pay a monthly usage fee or not:
- Due: Due allows you to send an invoice, track time, project management and credit card payments platform designed to help companies of all sizes with its scalable solution.
- Quickbooks: Quickbooks is a full-service accounting platform that also provides tools for invoices, online payment, and financial analysis;
- PayPal: PayPal offers a simple invoicing tool that has some customization and provides for online payments from customers and clients; and
In the age of email, it’s easy for miscommunication to occur. You might think you and your client are on the same page, and then they throw you a curveball about any number of things even if you laid everything out in an email. People sometimes miss obvious things in an email because they are skimming.
Here are a couple problems that can easily be avoided and get you paid faster:
- Be clear on the terms: When dealing with a client you MUST be very clear with the terms. Before starting any project lay out all terms, including payment intervals, estimated budget, and any other clauses that protect you. Make sure the client signs this agreement so you have a physical copy of it.
- Send the invoice to the right person: Sometimes you’ll have to send an invoice to the accounting department, but your client might not tell you that. Then lines get crossed and it takes you forever to get paid. Make sure you know if your project contact is the same as your payment contact. This is so important to avoid any unnecessary delays.
Just like most things in life, timing is everything. For example, Sunday the worst day to send an invoice. It will get buried in your client’s inbox. Try mid- to late-week. From experience, Thursdays seem to be the best day to send an invoice. If you’re sending recurring invoices, say the 15th and 30th of the month, be sure the payment intervals are clear in your contract.
Many clients will pay an invoice within 30 days. This might help their cash flow, but it doesn’t help yours. It is more than OK to ask that your invoices be paid with 14 or 10 days. Just make sure this is in your agreement and the client understands. Over-communicating on this aspect of your agreement is OK as long as you are respectful and professional.
The follow-up is no one’s favorite part of the invoicing cycle, but some clients just need a nudge to remember to pay you. This might be uncomfortable at first, but sometimes it’s essential to get your money. If a client misses a payment due date here are some follow-up suggestions:
- Resend the invoice: The first step is to simply resend the invoice with a friendly email reminder. This is easy if you use one of the online invoicing tools mentioned above;
- Call: If you don’t get a response after your friendly email reminder it’s perfectly OK to call the client. It’s very easy to miss or even ignore an email. If you call chances better to get paid even while you’re on the phone with them. Typically, they have probably been swamped with other things and aren’t being negligent; or
- Legal Action: Worst case scenario, your client turns out to be a crook who dodges your email and phone calls and you have to take legal action to get paid. Hopefully, this is rare, but it’s there if you need it.