You: “No, it’s fine. You don’t need to pay right away. Just send payment whenever works for you.” This statement will surely kill your business success.
Screw that. You need your money ASAP. Like… yesterday!
I know at first it doesn’t seem like a big deal if your clients pay at their leisure. But is is. Trust me. The following post examines the many reasons you should want to get paid as quickly as possible. By the end of this post, you’ll be ready to make a big difference to your bottom line. Let’s get started:
It Reveals Who Is Serious
Your best clients are the ones who have no cash flow problems. It feels like they are rich. You ask them about payment and you feel as though having them read your 7-sentence email was more of a nuisance than sending you $3,000. Clients who are willing to pay instantly rock. If you ask for instant payments (or at least ‘pay on invoice’) you’ll be able to tell for certain which clients are ready to rock and roll and which ones may not in the game past the second quarter. Money talks.
Money Gets Reinvested Faster
Let’s run some quick math. Because I love personal finance.
Let’s say you have a mutual fund and you’re wondering whether or not to reinvest the dividends. If you lose 1.33 (that’s a 2% dividend yield and 8% ROI) basis points per year on a mutual fund by delaying your dividend reinvestments by ONE MONTH, this is what your money will look like over time:
By the time you retire (40 years) this will be the difference in how much money you’ll have.
If you wait a month to reinvest your dividends: $2,797,664.94
If you reinvest right away: $2,807,810.40
That’s a difference of: $10,145.46 – because you essentially took instant payments versus monthly payments. $10,000 just for asking your clients to pay right away. Instant payments could pay for a car. In my eyes thats an easy success that I want.
Reinvesting money in your business makes sense. Especially since good businesses can return way more than the stock market so you’ll lose out on likely FAR MORE money should you not use instant invoicing and reinvest that money back in your business.
Connects Work to Money
Here’s what I do if I don’t get paid right away. I do the work, wait and when the payment comes, I don’t even care. That’s because the tie between my effort and the paycheck has been lost to the sands of time. That’s dangerous. Money is motivating for most of us. So in order to stay motivated and find success, our work and our pay should be as closely connected as the wafers of a Kit Kat.
Don’t Forget How Hard the Job Was
If you don’t get paid until a month after the work was done, you’ll have forgotten the challenge. You’ll have forgotten how hard you worked to get that money. This is dangerous because when quoting future projects, you’ll not have the same appreciation between work and pay. If this happens, you may not want to take on new jobs because your subconscious doesn’t see itself getting paid quickly. Or you’ll bid too high because you’re angry about not getting paid quickly and getting paid a larger amount is how you will make up for the lost opportunity cost. Either way – not good.
Tracking down Payments Is a Hassle and a Waste of Time
A few years ago, I had a client who owed me $120. The job took me a few hours to complete so I was happy with the pay per hour (even though that’s NOT a wise measure of your worth). But then he didn’t pay. We probably sent 20 back and forth emails about when he would pay, excuses for why he hand’t paid, him dragging his feet by confirming my payment information over and over again. Honestly, replying (politely – so it took a few drafts) probably took me another hour of time and frustration. This meant the job actually took me three hours instead of two.
As you can see, not getting paid right away can be VERY costly.
Get Paid Instantly
You will make more money, experience less frustration and more success overall . Please look into it.