As small business owner’s, we can all relate to having to track down payment for services rendered. No one likes to be that person, but when you are due payment, you have to do what you have to do. Unfortunately, it can just feel outright awkward and uncomfortable to go around asking for payment. That stress can be further compounded when you add on late charges or delay submitting final work to the client.
At the end of the day you want to remain respectful and retain the client’s business so you must move strategically. Even more importantly, when you are operating a small business, or any business for that matter, you need that payment to cover your expenses and maintain that steady cash flow. So the question remains, how do you go about tactfully handling the recovery of your business’s funds and still maintain the financial health of your organization? Well my friends, I am glad you asked because I have the answers.
In this blog, we will talk about the strategies you can implement in your business today, to set your future self up to receive payments quicker from your clients and keep your business running smoothly.
Let’s dive in and take a look at how you can get your payments faster!
In order to get your clients to speed up their payment for services rendered, it is best that you have a contract in place. Having a contract in place that details clear payment terms as well as outlining the details of the transaction will remove a lot of the guesswork. Make sure each party knows and understands what they are consenting to. An invoice is not legally binding like a contract, but having one in place can help protect you and your business from future disputes.
Another thing to consider would be to request payment upfront or a deposit at the onset of the project, as this can make things easier when it is time to collect payment.
Being consistent and respectful in how you interact with your clients can really go a long way in helping you to secure payment faster. Ensuring that the payment process is smooth is another way to get your payments on time.
To start, you should invoice your clients as soon as the project is finished. This will help to connect the completed work with the payment, by keeping the transaction top of mind and decrease your waiting time. If the work is recurring, it could be beneficial to stick to a regular payment schedule, such as the 1st and the 15th of each month, doing so will cut down on any confusion about payment due dates.
Also, it could be beneficial to send out payment reminders to clients at regular intervals as well. Even including small incentives to encourage early or full payment payoffs could potentially get clients moving in the right direction.
Being flexible and allowing your clients to pay in the way they prefer can also speed up the payment process. Cash and credit card payments are always easily accepted, but other alternatives such as mobile payments or online payments are other convenient offerings your clients can take advantage of.
Additionally, offering automatic payments can benefit your small business. Automatic payments can allow clients to charge the amount to their credit or debit cards automatically, without much effort for them. This further simplifies the process and will take away any guesswork for you to receive payment.
Having a proactive attitude when it comes to getting the money your owed is something you should consider because as well all know, there will come a time when an invoice becomes outstanding. Life happens and we are all human and can forget things.
Generally speaking, you can and sometimes should offer a grace period for the one-time occurrence, but it is best to remind the client that the invoice is still past due and still reinforce the payment terms. Also, it is okay to follow up with a gentle reminder and even penalize for late payment, unless other arrangements have been made.
Another action you can take to get clients paying quickly is to hold on to the work you have done for them until there is payment and if all else fails, another option would be to renegotiate the terms of the invoice.
Being polite in your interactions and respectful in how you communicate with your clients can really go a long way. In this day and age, “thank you” and “please” can grease the wheels to getting your clients to pay you faster. Even sending little notes can help personalize and memorialize the experience and keep it at the forefront of your client’s mind. It is not bribing, but just a simple gesture to let your customers know you are thinking of them and appreciate their business. Remaining calm when payments go overdue will help keep a good relationship fruitful and not get in the way of any future work.
When it is all said and done, not all of these tips will work for every client every time. You alone or your accounts receivable team will have to determine how best to interact with your clients. In the end it is best practice to send out invoices as soon as work is completed, offer different types of payment options for flexibility, be willing to follow up when payments are past due and always be kind and respectful to clients. These simple gestures, from my experience, will help you recover those owed funds sooner rather than later. Anything you can do to encourage your clients to pay their bills on time or earlier will save you a major headache in the long run. What are some tips or ideas you have implemented in your business that help you to receive payments quicker?
Until next time my friends,
Cheers!
JD Longino, CPA
