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How to make sure you get paid on time
Owning a business means you can choose your own clients, schedule your workload and set your own rates. The hard part is making sure your clients pay you on time to improve your bottom line.
How to make sure you get paid on time
Owning a business means you can choose your own clients, schedule your workload and set your own rates. The hard part is making sure your clients pay you on time to improve your bottom line.
Consider the following strategies to ensure that clients can pay you on time:
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Discuss it during the negotiation stage
One good way to ensure timely payments is to include payment terms during the negotiation stage.
Offering transparency prior to signing a contract with the client sets up the expectations from both parties, such as sending the invoice on time on your part and paying by the due date for the clients’.
This will also give you a chance to discuss any sanctions for late payments, such as late payment fees or applying interest on the outstanding balance, and negotiate additional or alternative payment terms. -
Negotiate a deposit
Another thing you can do to secure payment from your clients is to negotiate an upfront payment upon signing the contract and bill the balance upon completion of the project or service.
A deposit would ideally serve as an assurance to both parties because:
A.) Your business received payment for the product or services, which means you need to ensure that you can deliver what is required on your end to receive the remaining payment; and,
B.) The other party knows that your business is working to complete the project because you’re already partly paid for the transaction. This means they need to ensure that the payment for the balance is ready upon completion. -
Set a scheduled reminder about the payment due date
You need to keep track of your accounts receivables and ensure that your clients pay their bills – doing so may help improve cash flow.
Some clients may not necessarily be purposely delinquent – they may simply be conducting business with many companies and talents that they overlook some of their bills.
To avoid being the forgotten biller, ensure that you always send invoices out on time. It’s also advisable to schedule regular reminders about the outstanding balance after sending the invoice and before the actual due date.
For instance, both parties agree on a Net 30 set up (i.e. payment due date is 30 days after the invoice date). Consider sending reminders 10 and 20 days after sending the invoice and, again, a day or two before the due date.
It’s up to you how often the reminders would be, but they should ideally be spaced out in a way that doesn’t annoy your clients. -
Consider shorter billing cycles
Outstanding balances may sometimes be paid faster if the amount is broken down into smaller amounts and paid in shorter billing cycles. For instance, instead of a Net 30 set up, consider making the payments weekly.
This not only allows your clients to pay without using up a chunk of their budget in one go, it also helps improve your cash flow due to invoices paid more often. -
Offer different payment methods and incentives
Another way to get paid faster is by offering convenience and reasons to pay early.
Generally speaking, people tend to pay faster if the process won’t take up too much time, such as when they can just hand over their credit card or automate online payments. Consider giving your clients two or three payment options for increased convenience for both parties.
Likewise, you may wish to offer incentives to clients who pay early or consistently pay the full balance on time. For instance, you may provide an extra service for free or give a discount on their next statement. -
Be nice
Maintaining a good relationship with your clients helps because it can make your client more accessible when it comes time to collect payments.
Likewise, being nice to your client may convince your client to return the favour by ensuring that their bill gets paid on time.
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