The issue of unpaid invoices is one that’s familiar to every business owner. While most businesses have a few late payers to deal with, having too much of your cash flow held up can have a lasting impact on the overall health of your business for years to come.
Hiring a collection agency is certainly one solution, but being proactive about collecting on time can be a healthier, less costly model that helps you avoid the problem from the start.
Here are some simple tips to get your customers paying you on time, so you don’t have a problem down the road:
Invoice right away
Sending invoices is one of those tasks that easily gets put off to the end of the day, or the end of the week, when we’re tired and unfocused. This can lead to a big delay in getting paid and is a simple mistake to avoid. Consider the advantages of creating and sharing an invoice as each job is done, while you’re on site, within the customer’s sight line.
Mobile apps like Invoice2go make this process simple so you can send professional invoices from your device, and if your client is ready – accept payment then and there. Even if they opt to pay later, you’ll benefit from getting the task on their to-do list faster.
Use short, clear payment terms
Don’t agree to a job without discussing payment terms upfront, and be sure you are crystal clear on a few key points:
- How much
- What payment methods are accepted
- When payment is due
- What the penalty is for paying late
Talking about these details upfront not only helps your customer prepare for the cost, it also shows them you are a professional who knows your worth. Be clear about what you will be delivering to the client, and detail the work performed so they can see that you have completed what has been expected. Making the delivery and payment clear on both sides avoids the questions that inevitably end up delaying payment.
Make payment a breeze
The more options you give your client for payment – whether that is debit, credit, Paypal, or electronic transfer – the easier it will be to pay you. Instead of waiting for them to be able to get to a suitable payment method, if you can offer them an on-the-spot way to pay however they want, and increase the likelihood you’ll get paid immediately, rather than 30 days down the road.
Friendly reminders can go a long way
For some jobs, you may not be face-to-face with the customer when you invoice them, and they might not be able to pay immediately. Before payment is due, set up automatic reminders to go out weekly or biweekly. Not only will this keep the deadline fresh on your customer’s mind, but it avoids the cost and pressure clients can feel if they forget or miss a payment. It may even be that the first reminder is more of a check-in to be sure they have been happy with the service, that everything was as they expected. That way, you’re not necessarily asking for money, but staying fresh in their mind, reminding them of what you did and the contract you have, and offering a gentle nudge in the direction of payment.
Being proactive about getting paid on time gives you more control over your cash flow, and the health of your business.
Chris Strode is the founder of Invoice2go.