How to Get Paid Faster
If you own a small business, you know that chasing invoices is a headache. You also know that late payments can destroy your business. When I first started my company it was amazing to me how many clients would comfortably ignore invoices and pay when they felt like it–especially for work that was already completed. I forget where I read this quote, but it definitely applies here, “what you allow, will continue.”
Systems need to be in place in order for you to get paid faster, or you’ll always be pleading with clients to pay for your services which is financially and emotionally draining. If you do things right, you can be more confident in your business’s cash flow.
Stop Picking Up Checks
It’s honestly a waste of time–it’s just another thing to coordinate. Needing to pick up a check slows down the entire payment process. It can also be very awkward when something went wrong with the project that week, yet you still need to be compensated. Make it easy for people to submit payment online (see next tip below).
Get an Accounting Management System
Getting setup with Quickbooks Online was a game changer (yes, that’s an affiliate link) It involves a subscription, but it more than pays for itself in several ways.
You’ll get paid faster (obviously)
Tax season will be less of a headache
You get the full picture by taking advantage of their reports feature
It’ll make your company look much more professional
Establish a Payment Schedule
Your client should know when to expect invoices before they sign with you, that way they can’t give you the excuse that they didn’t know payment was due. My clients know exactly when to expect invoices, so there’s no argument about why they received an invoice at a specific time during the project.
Automate Your Invoices
This system gives you one less thing to worry about and improves your cash flow. Most contractors I work with invoice clients every week, every other week or at certain phases in the project. Since the requests for payment happen at regular intervals (or at least they should), this is something that should automated as soon as you book the project.
Have Consequences for Late Payments
And stick to them! Consequences only work if you reinforce them. In my contract and proposal, I state that if payment is late work will stop until payment is received. If payments are overdue after a specific number of days we also charge interest. When a payment is late and you remind clients of these consequences, it’s funny how they magically find a way to get the money to you as soon as possible.
Having a service-based business means it’s crucial that you get paid on time. It’s not too much to ask and you shouldn’t feel guilty about it. The most successful companies are unapologetic about being compensated on time, as they should be. Clients that value your work will have no problem paying you on time, but you need to establish the boundaries from the very beginning of the project.