Being in business is a positive thing. Having sales is a good thing. But getting paid is the absolute necessary thing for your business to thrive.
Here are 21 ways to ensure you get paid:
1. Requesting a deposit amount from your customer when you sign the contract.
In fact, whenever there is a decent outlay either get a decent deposit or even consider asking for payment first.
2. Send an invoice to your customer as soon as your work is completed.
Don’t wait until the end of the month or when you are doing a batch; action it promptly. Have a system to ensure nothing is overlooked – nothing worse than missing a $20,000 invoice being issued. Ouch!
3. Have a regular schedule so that you make sure your payment schedules are on track and you don’t find yourself short.
Having said that, have a buffer, because despite the best laid plans, things can come unhinged.
4. Have a written payment agreement between you and your client prior to the work.
Ensure this agreement covers off on things like interest charges or that they will be liable for legal costs should you have to pursue payment. This absolutely must be provided in advance before you start, ideally prepared by a solicitor (once, not every time) and preferably signed.
5. To encourage your customer to pay on time, penalize them for late payments.
My local Council do this with my rates – it will cost me a chunk extra even if I am a day late, so I can assure you I am careful to pay a few days before it’s due.
6. Constantly send payment reminders to your customer.
Be tenacious in this manner; many accounting systems these days even do it for you automatically – Wave, for example, is one.
7. Be flexible with the type of payment that your customer can use.
Accept credit card payments (on site, on the job and at time of delivery), or Ebay or direct or cheque or PayPal or a number of other ways. You don’t have to offer everything, but give people at least 2 or 3 choices, and select those choices based on your business type. Eftpos is great for a physical or retail business however, mobile Efpos/mobile credit card is great for tradies. You don’t leave a job until you have secured payment – but be sure you made that term very clear up front.
8. Build a good rapport with your customers at all times and ensure you are doing a good job; it’s much easier to get paid when your customers are happy.
I have one client who always emails me back re my invoice, immediately after issue “Paid with Gratitude”.
9. Use accounting services like Xero, MYOB or Quickbooks to automate invoices.
These are all paid (mostly subscription based) accounting programs which are all quite similar in style. If you are going for a free option, Wave Accounting is quite good, but it does lack a few features, so be sure to check out the software thoroughly before you make a selection.
10. Recognize the efforts of your customers to pay you on time by thanking them.
My policy in a prior business was that my accounts girl sends a text to every client who paid their invoice on time, over a certain amount, a thank you. We varied it each month, so it was fresh and different, but still took the time to show appreciation.
11. Make your payment terms shorter; if you want 30 days, set 14 days.
If you want 14 days, set it as 7 days. People always stretch what they are given, so don’t go offering 30 days, unless you like waiting 60+ days to get paid.
12. Charge interest or late fees for payments that are made late (as mentioned above) or use this in your collection calls
Say that you will charge interest if it’s not paid, or that you have charged the interest, but will wipe it if the account is paid within 48 hours. You can make the interest payment either a carrot or a stick.
13. Send your customers friendly reminders to make their payment – they can be nice, firm, funny even.
Vary how you communicate … text, email or pick up the phone. However, may I say, if your emails are being ignored, stop emailing and revert to the phone. WorkCover, for example, send you a reminder BEFORE the payment is due. I personally find this annoying, but it alleviates waiting for the payment to be late.
14. Give discounts to customers who pay on time is one option to consider.
Personally, I’m not a fan of discounting, but it does work.
15. Take care of debts as soon as they are due.
Practice what you preach and expect. It’s called karma; what goes around, comes around.
16. You can set up recurring invoices for loyal and recurring customers.
Streamline the whole process.
17. Ensure your invoice has clear info on it – your bank details, or how to pay, or quite simply a phone number to call if the customer has a query.
Seriously some of the biggest companies miss this detail … and customers take the stance, they will simply wait to be chased because it’s otherwise too hard to query the account.
18. Make sure to review your invoice system weekly and do your debt collecting weekly.
Keep great notes on promises or who you called when and reference those notes in further discussions. The squeaky wheel truly gets the grease.
19. Stick to one single system of payment instead of juggling between different systems and ensure your receipting and bookkeeping is current.
If it’s not current, how can you possibly know (or chase) people who owe you money?
20. Ensure your invoice is received.
Unfortunately, these days so much ends up in spam; if you invoice randomly, consider also texting that day to advise the invoice was emailed, if not received, check your spam box and thank them for their business.
21. And lastly, don’t hesitate to ask for your payment.
You worked for it, you deserve it!