It’s no secret that steady, on-time cash flow is crucial for a business’ survival. But what about when a client is consistently late for payments?
Back in August we brought you 5 helpful strategies small businesses can employ to get paid faster, and now, we’re back at it again with 5 more to make the list.
1) Write Detailed Contracts
So much hassle can be avoided with a little extra effort put into your contracts. As the legal foundation to all your business transactions, if you don’t have every detail laid out to both guide and enforce healthy client interaction, problems are bound to arise.
Save yourself and your client the trouble by detailing the terms for prices, payment schedules, fees if a project is canceled unexpectedly, and how additional work or revisions are to be handled.
2) Ask for Deposits
Though mentioned briefly in our last blog post, for projects that are expensive or lengthy in nature, this one is pretty much a must.
I’m just going to say it again: it’s perfectly acceptable for a business to ask for a portion of the payment upfront! Plenty of owners do it, and 50% at the start of a project, 50% upon completion is a well used percentage.
Ensure that your cash-flow is still there, regardless of project or timespan, and ask for initial deposits!
3) Schedule Your Invoices
Just like you have a payment schedule for your clients, so should you also set the times you send your invoices to a certain day of the week or month.
That way, your client can expect when payment is due and prepare ahead of time, while you can ensure you’ll have the money in time for reoccurring business expenses.
4) Set Automatic Reminders
Often, invoices are simply forgotten in the craziness of business. Cut back on late payments and awkward emails asking for your money, by setting professional, to-the-point, reminders that automatically send at different invoice benchmarks, such as one week before payment is due.
One less thing to worry about, one less thing to remember.
5) Establish Interest Rates
Last but not least, studies have shown that including interest rates in your contract and enforcing them when it comes time for invoicing, is a great way to cut back on late payments. Just make them reasonable – experts recommending a rate of under 10% for each day past due – and don’t forget to include updated, itemized balances for each late invoice reminder.
Regardless of what you sell, your business is your livelihood and you shouldn’t have to worry about getting paid for your services.
Stick up for yourself, be assertive, be respectful, and take the steps to protect both your client and your cash-flow!
