Customers and clients paying you late is one of the most frustrating experiences in business; you’re not getting the rewards for your labour, and you’re at risk of entering a nasty cashflow spiral that can delay plans and destroy your cash cover.
Unfortunately, not every client will fully appreciate that, or might try and stall their payments to benefit their own cashflow. You therefore need to work out a system to get paid for the work you’ve done on time. Here’s our advice on what to do.
Send your invoices on time – and remind clients of them
Sending your invoices to clients in a prompt manner seems obvious enough, but it’s worth going over because of how important it is to good invoice management.
As you might expect, keeping on top of your invoices means each one needs to be sent out on time. A lot of businesses pay invoices in batches, so if you can meet your customer’s internal deadline for the current batch, you’re likely to get paid on time.
Our top tip for sending invoices on time? Accounts receivable technology, which is offered by the biggest accounting software companies like Xero.
These types of software use optical character recognition, which ‘reads’ a scanned invoice and automatically transfers the data to a centralised database for you to send to clients at the push of a button – cutting out a lot of admin time and eliminating manual errors.
Remember to remind clients of your invoices (you can automate this, too). Sometimes, clients miss a payment deadline simply because they forget; by reminding them, you remove this problem from the equation, and narrow down the cause of their late payments.
You can also (and should!) give them a call that is polite but assertive. There’s no need to feel awkward about doing so – you’re well within your right to be direct. Be fair with them, remind them how long ago the bill was due and offer a few different ways to pay.
Payments plans, discounts and penalties
Another way to get paid on time is to be flexible in the way you approach invoice management by offering payment plans.
The subscription model is great for businesses that offer repeat services, while a ‘pay half now, pay the rest later’ approach can also help to ease the cashflow impact of waiting for full payment. Not only does that get some money in the bank early, but makes sure you get paid for your work if they end up cancelling. Deposits are great for the same reason.
A payment plan might not always be suitable, but adding discounts for paying early and penalties for paying late are likely to be.
Just make sure you’re clear that you’ll apply penalties to late payments; only a really unreliable client would object to that if they’re warned well in advance.
Maintain good relationships with clients
A good relationship with a client is about more than providing services; it’s about building a working relationship, bringing tremendous value and differentiating yourself from others.
When you do everything you can to tackle your clients’ pain points and go the extra mile, they’re more likely to pay you on time, simply because they respect and value you as a partner in their growth. They certainly wouldn’t want to risk annoying and subsequently losing you!
Getting to know the individual at your client’s business who handles invoices can also help to put a face to the name – making it harder for them to ignore your requests for payment.
Consider cutting ties
Above all else, remember that you’re entitled to refuse continuing to work with anyone for a host of reasons, failure to pay being chief among them.
So, consider cutting ties with particularly unreliable clients if nothing else works to get them to pay you for the work you’ve done for them on time.
Some people are just bad at paying, whether they’re inconsiderate, strapped for cash themselves or just disorganised – there’s nothing you can do to change that.
Cutting ties is sometimes a necessary choice if the client you’re working with is really struggling financially – will they be able to hold their end of the bargain and come up with the cash to pay you for your hard work?
We love working with businesses to help achieve their goals. Feel free to get in touch with us to see what we can do for you.