Every business has its problem clients now and then, but when cash-flow interruptions are responsible for 29% of small business failures according to a recent poll, it’s important for businesses to have the security of quick income.
So, if you’re looking for ways to get paid faster, here are five tips to help shorten the gap between invoices.
1) Ask for a Percentage Upfront
Despite what you might think, it’s not uncommon for businesses to ask for a portion of their fee upfront before completing any work. From requiring thirty to even fifty percent of the cost at the get go, an upfront fee helps not only ensure a steady cash-flow for small businesses, but also mitigate the risk should a client decide to skip out on payment later.
If a client protests, simply explain that these are your usual payment terms or negotiate a lower percentage. But if they’re still unsure, consider not doing business with them altogether as this is usually a warning sign for delayed or nonexistent payments later.
2) Get the Accounting Team’s Contact Info
For many businesses, often the person you speak to about the job at hand isn’t the one who will be paying your invoice once it’s done. This is why the most effective way to ensure you get paid on-time is to insert a line into your contract asking for your client’s accounting team’s contact info. That way, when your invoice is about a week out from its deadline, you can notify your client’s accounts payable staff directly of the impending due date.
3) Switch to Electronic Invoicing
For those still using paper invoicing methods, not only does mailing client bills slow down the payment process by a couple days at least, it can also cost you quite a bit in paper and postage expenses each month.
Electronic invoicing is the future of business, and with accounting software like QuickBooks and other electronic invoicing options available, making the switch to digital can save both you and your client time and money.
4) Know When to Cut Your Losses
As simple as it may sound, if a client consistently fails to compensate you for your work, it’s best to just walk away. “When a customer doesn’t pay you, there is no business,” Denise O’Berry, small business consultant and author of Small Business Cash Flow: Strategies for Making Your Business a Financial Success, says. “Cut them loose and begin to arrange payment plans to collect what’s due to you. You’ll feel better and it frees you up to work with clients that will pay in a timely way.”
5) Set Your Own Invoicing Schedule
For many small businesses, often the simplest fix to get paid faster is merely setting an invoice due date. Not having a clear payment schedule outlined in your contract or invoicing terms is exactly like inviting a client to take their time paying you. After all, they’re busy too and if your only requirement is to pay when convenient, you can expect to wait a long time before you see any money.
No one ever said an invoice has to be given 30 day terms. As the business owner, you decide what invoicing schedule works best for your company, so don’t be afraid to set the guidelines for your clients!
If you need help with improving your invoicing process, reach out to us today! 310-534-5577 or [email protected].
Image courtesy of Canva.com
