When you go above and beyond for clients, you expect to get paid just as fast. The biggest disappointment for a freelancer or small business owner when those expectations are not shared by the client when the invoice comes due.
Staying silent and just checking the mailbox every day isn't the best way to handle the situation, but constantly asking may annoy your client. There has to be a better way to get clients to pay their bills on time.
Actually, there are 15 proven ways to transform those invoices into payments quickly:
- Use Positive Reinforcement: Offer rewards, like a discount, to incentivize your clients to pay on time - or even early. Make sure the early or on-time discount is something you can feel comfortable with, but don't discount your too far down. Make sure the discount excites your client enough to hit the payment button early, but not so much you feel put out.
- Don't Be Afraid to Use Negative Reinforcement: While some clients respond to positive reinforcement, others react more to penalties. This negative reinforcement tactic can be in the form of a late fee added after a late payment. The message is you are not willing to accept untimely payments. Again, come up with a reasonable amount that encourages clients to pay, as a huge late penalty may find you losing clients.
- Make it Convenient: Ask the client what is convenient for them in terms of the time and payment type. By showing you are flexible and want to make it as easy as possible, you increase the likelihood that they will pay on time. The give a little to get a lot philosophy in business relationships that often pays off. Here are a few good options.
- Automate the Invoicing Process: Stop sending paper invoices. Paper requires more time, and could get lost in the mail. Instead, offer an online invoicing process with the ability pay online. The client can do it right then while it is at the top of their mind. An automated billing system also continues to "ping" your client until it shows the invoice has been paid. There is something to be said for having a machine doing the nagging (follow-up) for you! Many online automated platforms also provide a way for your client to see your hours, projects, and payment rates, which help them to effectively manage their finances.
- Switch to Recurring Billing: You may be just as busy as your client and forget that it's already that time again to invoice. Having different billing dates can confuse the client and upset the delicate payment balance. However, by choosing to partner with a recurring invoicing system (hopefully like ours), you may find that your client pays on time, every time. With the client's credit card or checking account information in the system, there is no doubt that payment will be made each month. You can bank on it.
- Get it in Writing: If you are starting to work with a client or are at the point of renewing a contract, this is the time to state those payment terms in writing. This ensures that there are no misunderstandings about invoice payment expectations and payment options. By discussing it together as part of the contract process, you and your client are involved in the decision, which can also help to build a positive framework for timely payments.
- Ask for Upfront Payments: This trust-building tactic is typically for new clients where you may be completing a one-time project or large project. Once a relationship is established you may not need to use this method. However, with a new client, it is good to get an upfront payment before the work starts, or at least a partial payment. This way, you can be assured of payment and dive into that project feeling good!
- Nurture Client Relationships: Getting to know your client and establishing a good relationship goes a long way in terms of getting paid on time. The client gets to know you and how you work, while you learn more about how they operate. This mutual understanding builds respect and trust while also making it easier to pick up the phone and ask about your payment.
- Create a Retainer: Rather than charge a la carte rates for every project a client asks you to work on, each with different rates or fee schedules, develop a monthly retainer rate that covers everything in one simple payment. Not only does this encourage your client to continue using you over the long-term and entrust you with additional projects, but it also makes it easy for them because they are only dealing with one rate. Retainers can also be typically charged at the start or middle of the month, which helps you manage your cash flow as well.
- Negotiate: Hammer out payment arrangements from the start that satisfy both you and your client. Don't agree to the first offer unless it absolutely ticks all the boxes for you. More than likely, you will need to go back and forth a few times to find that happy place. Once you do, that agreement is often all that's necessary to keep your client on pace with payments.
- Add More Payment Forms: Offering more ways to pay leaves a client with very little excuses not to pay on time. Going beyond the business check option, you can accept credit card payments, online bill payment systems, direct deposit and more thanks to today's more flexible banking and payment technology platforms. It may be that a client has not been paid themselves and only has a credit card to use, so if you accept this payment type, you may find that you get paid on time.
- Hold Work Hostage: I personally don't like this option and rarely use it but it still works. While the idea of not delivering work sounds like an escalation to instant conflict, it does not have to be. Some clients might be testing the waters to see what they can get away with, and holding a completed project hostage until payment starts arriving on time sends the message that you won't be taken advantage of. Don't be afraid to resort to this tactic. Remember, a business relationship goes both ways--you have a set agreement that work will be completed for payment.
- Be the Squeaky Wheel: There is nothing wrong with following up and asking about payment. Over time, a client will put some oil on this type of squeaky wheel, greasing the payment wheels to deliver payment on time. Eventually, most clients will get tired of calls and emails for late payments, and will change their payment habits - if just to get you to stop contacting them.
- Speed Up Invoice Delivery: Invoice more often by shortening your payment delivery terms to every two weeks rather than monthly or even weekly. This may help the client with their cash flow issues and also train them to become timely with payments. Meanwhile, you get paid more often so timing becomes less of an issue because your cash flow has also improved.
- Resort to Legal Routes: As the last on this list, resorting to legal routes should be the final step you take to get clients to pay on time. That's because these types of measures often create a high level of animosity that can damage business relationships and burn a bridge. Make sure you cover all other ground first, such as writing a formal letter that states further measures you may have to take, such as resorting to small claims court or a collections agency.
Over the past month I put together a freelancers guide to invoicing and getting paid. It should help you with everything from invoicing to getting paid.
With on-time payments from your clients, you can use all that extra, worry-free time to get more work done for your existing client base or even prospect for additional clients and projects.