Small businesses and freelancers depend on their invoices’ being paid in a timely fashion. Without the financial wiggle room that larger companies have, you’ve probably felt the weight of pending invoices while trying to run your small business. You shouldn’t have to try to force your clients to pay you on time if you employ practices that can help you ensure that more people do pay in a timely fashion.
Have Clients Sign Contracts
When you’re selling a product, you don’t typically need a contract, because the transaction happens right away. When you’re providing a service, however, especially one such as graphic design or freelance writing, the transaction might take a while. To ensure that you won’t have payment discrepancies or confusion down the road, have your client sign a simple contract. All you need to do is have your lawyer outline how much the client owes for what kind of services and when you expect that payment. This makes it clear in advance what everyone’s expectations are.
Get a Percentage Up Front
If you’re going to be investing a week’s worth of time (or more) on a big project, get some money up front. When costs will be associated with the work you’re doing, such as travel, have the client pay those before you start the project. Otherwise, you’ll be dipping into your own finances and waiting for the client to pay you back. Asking for a percentage of the overall cost up front helps make sure you’re not starving between big jobs.
Offer Incentives for Early Payment
Give a 5 percent discount if someone pays you on the same day when you present your invoice. Offer a 5- or 10-percent-off coupon for your services if a client pays within a short period of time. Only you can determine what’s affordable for your specific business, but once you decide on an incentive, make it clear. Tell clients about it when they first engage your services so that they can plan to have your payment ready.
Use Online Invoices
Sending an invoice via mail feels very official, but when doing so, you have to pay for postage. What’s more, it takes longer for your invoice to get to the client — and for the client’s money to get back to you. Unless you’ve got no alternative, send electronic invoices. If you’re using an invoice management software, such as Sage One, electronic invoicing is simple. Software like this will give you the ability to create, send, and manage your invoices from anywhere. Plus, with ready-to-use templates and the option of easily sending payment reminders, you’ll have an easier time keeping everything organized.
Keep in mind that when you invoice, you absolutely must do two things: Send the invoice immediately, and make certain the due date is clear.
Accept Multiple Forms of Payment
Image via Flickr by 401(K) 2013
Taking credit cards can be a hassle if you’re a one-person operation, but the more types of payment you accept, the easier it’ll be for your clients to pay you. Many merchant account providers make it easy for freelancers and small businesses to take credit cards, and they take care of the difficult bits for you in exchange for a small percentage. If you only take cash and checks, you’re going to be waiting a lot longer for your money.
It’s tempting to send a nasty reminder or threaten late fees when you’re strapped for cash and a client hasn’t paid a big bill. But if you ever want to work with that client again, resist the temptation. Keep sending polite but firm reminders that the client owes you a payment. Put “please” and “thank you” in your invoice notice as well as in your reminders. It sounds like a table manners lesson from kindergarten, but according to Forbes, the niceness actually works.
You can’t run your business without money, so make sure those invoices aren’t stacking up unpaid. Take a look at the people you’re doing business with, too. If a client chronically forgets to pay you on time (or at all), it may be time to end that business relationship and use your energy to look for better clients.