If you’ve got one or more clients who chronically pay their bills days or weeks late, that can have a huge impact on your business’s daily cash flow and ability to operate smoothly. It’s a delicate dance dealing with late payments without alienating your clients or ultimately losing their business.
Below are a few guaranteed ways to smooth out this sometimes fraught process, all while making sure you retain happy, satisfied clients and that you’re also getting what you’re owed, when it’s owed!
- Make Invoices Prompt, Proper, and Thorough
It may seem obvious, but invoicing your clients for work promptly after completion is vital to getting paid on time. You can’t expect payment immediately if you wait weeks after the work is done to even send the request.
Additionally, you should make sure your invoices are clear, professional, and firm about the scope of work, due dates, and payment options, etc. You may find that investing a little into even basic accounting software like Quickbooks can do wonders for making your invoicing more clean and precise.
- Get a Bit Personal
Many times in business, it behooves you to keep a bit of professional distance between you and your clients. When it comes to getting paid on time, however, you may find that many clients respond better to a personalized approach.
Get to know the heavy-hitters and check-cutters at your client’s business on a first-name basis. Consider sending a personalized, handwritten note to genuinely thank them for their business along with that invoice and you may see that getting you paid will rise to the top of their to-do list.
- Incentivize Early Payment
Tap into the power of positive reinforcement! Consider offering special perks or even small discounts to customers who pay their invoices on or before the due date.
Rewarding someone for their prompt attention to a bill is a great way to create repeat customers as well. Make sure that the discount you offer isn’t so large that it could damage your profits, but rather just enough to entice customers to move quickly.
- Up the Convenience Factor
Sending invoices digitally and providing multiple ways for your customers to pay their bill is a great way to make paying both easy and convenient. These days, it seems that paper bills get lost in the shuffle and forgotten more easily.
While some customers may still prefer to pay by check, offering options like PayPal and other credit card processing avenues will ensure customers can pay you now, even if they don’t have quite enough in the bank at the moment.
- Establish a Payment Timeline or Calendar
Especially when embarking on a large or lengthy project, it’s important that you establish clear payment terms with the client in advance of beginning work. Sit down with them first and set dates for milestones and their corresponding payments.
Clear communication upfront will help to cement the expectation that work on the next phase will only begin once payment for the previous phase is remitted. This is major incentive for your client to pay on time and keep the project moving at a good pace.
- Hold the Line
In the event that a client is regularly late or simply not paying you for your product or service, you have a right to stand your ground.
Refusing to do any further work for them until payment is rendered and/or assessing late fees are both totally acceptable in this case. This may be the only way to impress upon some clients that paying for your services is not an optional part of doing business with you.
Having customers who take forever to pay you can be a huge drain on your resources. But always remember that you don’t have to accept that as just a “part of doing business.”
You are entitled to prompt and complete payment for your products and services, and there are plenty of gentle and helpful ways to reach that goal that don’t have to involve chastising or punishing your tardy accounts. And, of course, always know that you have legal recourse available, but hopefully, by using the tips above, you’ll never need it!
Meredith Wood is the Editor-in-Chief at Fundera, an online marketplace for small business loans that matches business owners with the best funding providers for their business. Prior to Fundera, Meredith was the CCO at Funding Gates. Meredith is a resident Finance Advisor on American Express OPEN Forum and an avid business writer. Her advice consistently appears on such sites as Yahoo!, Fox Business, Amex OPEN, AllBusiness, and many more.