It seems there are two types of people in the world: those who can’t let an unpaid bill sit, and those who think the money isn’t actually due until they have received a fourth payment reminder.
At times, it can feel as if your client list is overrun with the ‘payment reminder’ crowd! You know how it goes…
You send out an invoice. You wait.
A second invoice. You wait. Perhaps grumbling a little.
A third invoice. You wait … but you’re getting pretty annoyed now.
By the time you send out the final reminder you are well on your way to tearing your hair out. You are frustrated and you’re struggling to remain polite. You’re considering dropping an otherwise great client.
The time you spend chasing payments is time you’re not spending on your clients or on other important business tasks. And, trying to run a business when you can’t keep track of your cash flow is no easy task.
It doesn’t have to be like this though! Here are a few tips for making sure clients pay you in full and on time — without the frustration of having to chase them down.
Set clear expectations.
Every business owner has their own way of doing things, so you can’t expect your clients to know your payment terms unless you tell them. Some businesses say 15 days. Others go for 30. Some require a 50% deposit upfront, others the full fee before service. Some may offer a payment plan.
Whatever your business practices are, let your customers know the deal from the beginning.
Remember to put a payment date on every invoice (we realise this sounds ridiculously simple, but you would be surprised at just how many people forget to do this). State your payment terms in your contract and be sure to direct new clients to these terms before they sign on the dotted line.
Then, if you do end up on the late payment chase, your clients really have no excuse — you’ve covered your bases.
Consider late payment charges.
After too many hours spent hassling clients for overdue payments, many small business owners resort to introducing penalties for late payments. This can be a fantastic motivator so it is worth considering, just remember to highlight this in your contract and make your clients aware of your late payment policy from the outset.
Simplify the process.
How easy is it for clients to pay you? This sounds incredibly obvious, but it can be a real obstacle for many businesses, so it is worth a mention: make it as easy as possible for your clients to pay up!
How often have you put off paying something because a business had a strange payment process? Maybe you had to send a cheque (do you even have a chequebook these days?) or you had to send the invoice receipt to one person in the company and the payment to another?
Clients will be much more inclined to pay promptly if you have made the process simple for them. Make it obvious how to pay, letting them pay online if possible and using a programme (like ClearBooks!) that gives them a couple of different payment options, for example, PayPal, credit card or bank transfer.
Be sure to follow up on late invoices.
No one enjoys chasing people for money, so it can be tempting to it put off. It can almost feel embarrassing to start ‘harassing’ clients for unpaid invoices. But, as much as you love your job, you have your own invoices to pay and job satisfaction doesn’t pay the bills.
So make life easier for yourself by scheduling invoicing and payment reminders in your calendar. Alternatively, to make life easier still, you could take advantage of accounting software that does a lot of the work for you. Using ClearBooks, you can easily keep track of unpaid invoices and you can instruct the system to send automatic reminders and prompts to any late-paying clients.
No more scrabble around with umpteen different spreadsheets, and calendars –– just payments, on time and in full.
Success from the start.
Unpleasant as it may be, following up on invoices is one of the most important things to get a handle on when you are running a business. So set yourself up for success from the start. Remember to provide your clients with clear expectations and easy payment gateways and remove some of the stress by setting up automated reminders.
If you like the idea of having more time to spend on running your business instead of chasing unpaid invoices, why not sign up for a free trial of ClearBooks?
Click here to start your absolutely free 30 day trial –– we don’t even ask for your credit card details.