For new entrepreneurs, and for many of us who have been doing this for a while, one of the biggest complaints about business is not getting paid on time. There’s always that client who pays invoices late…sometimes even months late. That certainly doesn’t help our cash flow, as we have our own vendors to pay. So how do you make sure you get invoices paid on or before they’re due?
1. Set Up a System
You can’t expect customers to pay you on time if you don’t have a payment and invoicing system in place. Likewise, it gets confusing if you bill people as services are rendered, rather than picking one (or two) day a month when you invoice everyone. Decide what your payment terms will be and stick to them. Mine are pretty stringent: 10 business days after receipt of invoice. I bill on the first and 15th, depending on the client. This helps my cash flow smoothly throughout the month. And my clients respect my terms. Very few go beyond the due date more than once.
Have your system in writing in your initial agreement and on each invoice.
2. Offer Discount for Early Payers
One way to motivate people to paying invoices early is to give them incentive through a discount. It might just be 5%, but if your invoices are large, your customers will appreciate the savings. The discount does, however, need to be enough to instill change. If 5% isn’t getting you any early birds, go up. It’s better to lose a little to get paid on time than to be paid the full amount late.
3. Charge a Fee for Latecomers
The flip side of the motivation equation is negative reinforcement. For anyone who pays beyond your terms, charge a small fee, and increase it as that time period grows. If you have a client or two who consistently pay really late, this may be a wake up call to pay better attention to their accounts payables.
4. Talk to Your Contact
Sometimes the person you work with isn’t the person processing the checks. But it still can help to explain there seems to be a disconnect between the invoice you’re sending and getting paid on time. Sometimes your contact won’t even know that you’re getting paid late, and he’d be happy to talk to the accountant to speed things along. Asking never hurts.
5. Be Flexible (Sometimes)
I really, really like being paid on time. But sometimes I have to ask myself if it’s worth stirring up a scene if an invoice is paid a week late. Usually, it’s not. And this doesn’t happen consistently. But check-signers travel, things get delayed, et cetera. Be flexible to maintain that solid relationship with your client.
Photo: Stock.xchng user 2020VG. Royalty free.
Susan Payton is the President of Egg Marketing & Communications, an internet marketing firm specializing in marketing communications, copywriting and blog posts. She’s written two books: 101 Entrepreneur Tips and Internet Marketing Strategies for Entrepreneurs, and has blogged for several sites, including The Marketing Eggspert Blog, as well as Mashable, Small Business Trends, FutureSimple, BizLaunch and Lead411. Follow her on Twitter @eggmarketing.