In business, probably the most awkward situation to be in is having to remind clients about settling their balances. Even more awkward is trying to request payment while dealing with the conflicts associated with additional late charges.
You hustle to work for clients and meet their deadlines. But, after delivering your work as promised, there’s no pay. The client is satisfied, but they are not paying you. It can be a serious issue that can result in negative cash flow.
How do you avoid this problem? Make your clients pay on time, if not earlier.
8 Proven Strategies to Get Your Clients Pay You Faster
1. Set Up Payment Terms
Establishing payment terms upfront ensures that your client knows what they’re getting into from the beginning. It should also set up their expectations when it’s time to compensate you for your service. Add a section in your contract outlining things like your billing schedule and penalties including late fees and interests. As far as the penalties go, make sure to enforce them.
2. Ask for Down Payments
In your contract, require your client to make a down payment before starting any work. While full payment is ideal, some clients may be hesitant to pay before receiving an output. It’s a two-way street and you can try meeting halfway by asking for half upfront and half upon completion. You can also look into breaking your project into milestones and asking for payment for every one achieved.
3. Invoice on Time
With so many tasks on your plate, it can be easy to lose track of things that you may even forget to send an invoice. But, how would you expect a client to pay on time if you can’t send their billing on time? Bill your client every time you complete a project and stay on top of it until you close it.
4. Give Gentle Reminders & Follow Up
Your job doesn’t end after sending an invoice: Offer gentle reminders about an upcoming payment and don’t be afraid to follow up after the due date. Otherwise, lack of communication can set a poor standard, giving your clients the message that they can receive your services even without having to pay on time.
5. Streamline Your Payment Process
Make it easy for your clients to pay for your services—the less time it takes for them to settle the balances, the faster you are likely to get paid. One thing you can do is to switch to a retainer-based model, wherein a client pays the same amount every billing for the services you offer. This is particularly useful if you are billing by the project or by the hour.
6. Explore Tools & Services
There are tools and services today that can help businesses stay on top of their accounting with some advantages that manual methods lack. For example, you can sign up for cloud-based services that allow you to send automated reminders to your clients a few days before their payment is due. You can also benefit from consulting with a business analytics and financial modelling agency to help you develop a financial model, covering areas of your business including billing and cash flow management.
7. Establish Strong Client Relationships
You know who pays right on time? A client that feels valued. Getting to know your clients—going out of your way to provide value-added services—is one way to gain their trust and loyalty. Not only that but having strong business relationships with them can make you feel more comfortable collecting and following up for payments.
8. Reward Early & On-Time Payment
Give your customers a reason to pay their bills on time. You can offer them a discount on their next billing or give them a free service just by paying early or on time. Here, instead of emphasising on late fees, highlight the positive options first.
Many businesses use longer payment terms to attract customers. But, you may not always have the bandwidth to do this. It may even put you at risk of experiencing cash flow issues.
In reality, the problem is not always the clients who pay late. Sometimes, it depends upon you setting boundaries and expectations, staying on top of your finances, and making it as easy as possible for your clients to pay you.
There’s so much to cover on how you can make your clients pay on time, but these tactics should help you start. Try experimenting on them and see which ones produce the best results.
Do you have any other tips to add to the list? Let us know by leaving a comment!