How To Get Paid Faster
One of the toughest things you must do as a businessperson is get paid! You work hard for your clients to provide them with a valuable service, and then spend months chasing your money. The truth is, many invoices get put on the back burner, because unlike credit card companies who will immediately report the late payer to a credit agency, the smaller business will usually not do this. It’s a tough call, sometimes, but you’re the one who will suffer if you don’t make it.
The First tip is the one you NEED to use for this month while people have any money to give – We all know it will get doubly hard to collect money in Jan/Feb
Follow up every day until you receive your money. Obviously, you should try to get paid before this need arises. Once your client realises your payment policies are lax, s/he will opportunistically attempt to exploit it. And remember – every minute that you are working to get paid is a minute that (A) you are working a second time for money you’ve already earned and (B) you are not working on a new job, which still needs to be finished on time, and you’re running that job later by the minute.
You will need to consider ALL these tips in Janauary so you do not have a list of unpaid invoices in December 2015 !
Make your payment policies clear at the time your services are retained. However your business is approved, at some point, your client must agree to your estimated price for the work they want done. If your payment policies are stated clearly on your contract, bid, or whatever document you use to bind the contract, you are ahead of the game.
Accept all forms of payment and encourage credit card payment. If possible, take credit cards. In this way, you are sure to be paid in timely fashion even if the client doesn’t have the funds at the current moment. Shop for a merchant account provider and set up credit card processing for your business.
Get a deposit in advance. Unless you have a relationship of long standing with the client, get money in advance, and then plan to collect some more midway through the job. Usually, this is 30/30/40 – 30% in advance (to bind you, and to enable you to purchase materials), 30% upon completion of some agreed-upon benchmark, and the balance upon completion. By the way, make sure it’s clear that “completion” means on the day you deliver it – not whenever they feel like it.
Always let the customer pay when they offer. One of the dumbest things business owners do is shoot themselves in the foot by not accepting a payment when it’s offered. Many times, a client will ask, “Do you need a cheque now?” and the business owner says, “No, that’s okay, we’ll get it at the end.” Don’t do this! If the customer is happy to pay up front – let him!
Make arrangements for payment before you deliver the final product. Hold back enough so that they will need to pay you before you deliver the finished job. It is notunprofessional for you to do so, though many business owners consider this a “low-rent” practice. It’s not low-rent – it lets them know that you are a professional accustomed to being paid for your work in a timely manner. Just say something like, “Hey, Mr. Jones, I have your job all ready to deliver. Can you have a cheque ready for me if I swing by around 3 PM?. The balance due is €470.78.”
Apply your payment policies to every single customer. Don’t give your friend Joe’s buddy a bye on this. If anything, treat friends of friends with even less trust than a stranger – they often attempt to take advantage of your cozy relationship with their brother, buddy, whatever. If this guy has not paid you by your due date, call him immediately and ask for payment. If you are put off till the next day, call again the very next morning.
Contact the credit agencies. Printing a warning on the bottom of your invoices is fine, but if you fail to follow it up, you won’t ever be taken seriously. Contact the credit agencies and report late-payers. If it’s their first time, call the client first, and let them know that you’re terribly sorry to do it, but unless you receive their payment before the 30 day deadline, you will have to report it to the credit agencies, thus damaging their credit. It’s a powerful incentive to pay.
- Don’t fail to send people to a collection agency if you don’t get paid. Often, collectors will pay up to 50% of what you’re owed, just for the opportunity to try to collect it.
- If you can show up in person to collect it always helps. People have a much harder time making excuses face to face.
- Before doing business with somebody make sure that any needed paperwork is completed; failing to have contracts or agreements in writing can significantly delay payments.
- If you can afford to, hire someone to follow up on your accounts receivable; this gives you a more professional gloss and makes payment seem more urgent. Even if it’s your spouse, who uses her maiden name to make the calls – in this way, your amiable relationship with the client is not jeopardized by crass calls about money, if that’s your view on the subject.
- Have a cash reserve that you can use for refunds when necessary. That way you won’t be hesitant about taking payment up front.