Cash flow is vital for any business’ survival, especially freelancers and small businesses. Why? Because when you don’t have much cash to begin with, you can’t afford to wait on payments.
If you want to increase your cash flow, and have your invoices paid on time, make sure you use the four tips listed below.
Accept payments online.
This is tip number one because it’s arguably the most important. It will also set the foundation for your entire payment collection process.
I know for some of you paper checks and invoices may be the most “comfortable” way to make payments. While they may be comfortable, they are just too slow.
If you want to expedite your billing entirely, you need to use an online payments solution. These products allow you to create, send, and pay invoices entirely online.
Additionally, digital accounting solutions also offer your clients multiple ways to make payments. The more options they have, the more convenient it is for them. This will get you paid quicker, and build stronger relationships with clients.
Use recurring payments.
If you tend to work on larger projects for clients, you should always try to use recurring payments. This is one of the best ways to guarantee consistent cash flow, at least from that specific client.
For example, let’s say you’re working over a 3-month period consulting for a business. Your duties are consistent throughout the engagement, and they offer to pay you monthly. Instead of leaving it up to the client, take control of the billing yourself. Ask the client if they’d be willing to use a bi-weekly recurring payment schedule.
If you chose the right online invoicing solution, then you can set this up directly from the platform. What this does, is securely store your clients’ payment information and automatically charge the card on the billing date. This removes the possibility for any back and forth about late or missed payments.
Communicate with the individual responsible for payments.
This one sounds pretty obvious. Which it is. That said, you’d be surprised how many freelancers and small business owners communicate with the wrong person when it comes to billing.
If you’re working for a small business, the business owner is likely the one responsible for paying the bills. If you’re working for a larger organization however, it’ll most likely be someone in the financial department. Before you even start work, you need to identify who this person is, and set up a direct line of communication.
I also suggest putting this persons’ name in the contract, this way there will be no confusion on whom is responsible for making the payments.
Don’t rush into engagements, be meticulous when scoping out the job.
When your business is young, it’s common for business owners to jump head first into any job. Regardless who you’re working for it’s imperative that you spend an ample amount of time scoping out the job.
In addition to a contract, you should include a full project scope. This should include a roadmap with timelines, features lists, payment schedules, pricing, expectations, and any other piece of information you deem important. Generally, the more detailed you are the better.
This way, if confusion should arise, you can quickly point to the contract and scope to clear things up. This will save you time, and money, when working for clients.
At the end of the day, there isn’t a single fix to your cash flow problems. However, the four tips listed above will be sure to make some big improvements.