Whether or not it’s your friend who promised to pay you back months ago (Sorry – we can’t help with that!) or the client who keeps saying the cheque is in the mail. Everyone has met one, and everyone has been one and there is no shame in admitting that. Sometimes we just need to nudge them a little.
As a business, reminding a client about the money they owe you can be terrifying. Not only because you have to get on the phone and actually remind them but doing it wrong can turn any business relationship sour.
While dealing with a slow paying client is inevitable, the best way to tackle them is with preparation. In Australia alone, it’s estimated that at least 45% of unpaid invoices are due to lack of reminders or convenient pay options.
These tips are easy to implement and cut straight to the point in eliminating day to to day issues allowing your business to get paid faster.
- Invoice as soon as possible.While this might seem obvious, how many business owners have a “I’ll get to it list” and how many times is something like invoicing added to it. It can take up to 3 months to be paid after a job and invoicing late will only prolong that. The way to tackle this issue is to make invoicing quicker and easier to do making it a simpler process for the business and the client. An idea’s to get you started could include streamlining the process with cloud technology allows you to invoice instantly and get paid faster.
- Ask for a deposit.Unfortunately, as my mum taught me at a young age, money does not grow on tree’s, and as a business, you have a responsibility to your employee’s, your other clients and even yourself. Asking for a deposit not only reduces the risk of a non payment but encourages the client to be involved in every step of the process, there’s no need to worry when they don’t answer you emails because you know they’re already invested and are therefore more committed than clients who haven’t paid yet. This deposit allows room for flexibility as it becomes a cash flow safety net until the job is finished.
- Upfront Pricing.Consider if upfront pricing is right for your business. This will enable complete transparency between your business and the client. Studies also show that trust is significantly higher in business relationships that offer upfront pricing and increase your likelihood of getting paid on time.
- Make it easy for your clients to pay you.The purpose of a good business should be to make life more convenient for their clients. How can you make their life more convenient with your service if its a hassle to work with you. Yes, I am talking about your payment options. Are you catering to your clients needs, and improving on your customer experience? More than two thirds of clients want to pay for their services on card or online as it is fast and secure. Imagine a store that only accepts cash, they are narrowing their target market to consumers who only carry cash as opposed to finding alternative methods for clients to pay.
- Enforce late fee’s.
It’s important to give clients ample opportunity to pay on time. If you wish to be paid within 30 days, set your terms to 15 days and implement a late fee after the 30th day. Late payments will encourage clients to pay on time to reduce their invoice. Businesses can sometimes even include a discount for clients that pay up front for their service. While including terms and late fee’s on your invoice is important, it is also a good idea to be clear and concise regarding payment. This will foster a good relationship and will increase customer retention.
There are so many methods to retain a healthy cash flow and get paid on time. What are you using to get paid sooner? Let us know via email at email@example.com.