As a small business, you depend on prompt and correct payments from your customers. Unlike the big global corporations with money to burn, a late payment of a few thousand dollars can be incredibly disruptive for a little start-up.
Whatever industry you are in, you’ll probably find that the majority of your clients will pay on time and cause no trouble. However, there are often those who you will have a lot of trouble with. Perhaps you keep having to chase them up for unpaid invoices, or they dispute every little cost you’ve itemized. As an entrepreneur trying to maintain a successful business, you should not have to deal with this. But what can you do? If you’re too aggressive with your clients you could end up pushing them away and losing them to a competitor. Yet if you’re too passive, you might set a precedent and create an ongoing payment problem.
But there are some strategies you can adopt to ensure you get paid quickly and efficiently every single time, thereby minimizing disruption and loss of turnover. Read on to learn more.
As soon as you take a new client on board, you need to set your expectations from the outset. When drawing up the contract, there needs to be a clause outlining a mandatory time frame for all payments. It should be made clear that if the client goes beyond this deadline, they will have breached the terms of their contract. This ensures that everyone is on the same page from the very start of your professional relationship and will prevent any sneaky clients from trying to take advantage of your goodwill. It’s always a good hire to get a professional lawyer specializing in contract law to take a look at any documents before sending them to a client.
You should be sending over your invoices as soon as the client has received the product or service they have requested from you. You want to set a good example by handling all paperwork as quickly as possible, in the hope that they will follow suit and do the same. If they have to wait around for you to send the invoice, there’s nothing stopping them from treating you with the same lack of courtesy.
One reason a payment could be late is that the customer requires further clarification on the items in the invoice. If something is unclear or confusing, they’re not going to blindly pay you until they understand what they are paying for. When drawing up an invoice, make sure it is as clear and legible as possible, and get in touch with their accounting team to follow up and make sure they are OK with making payment.
Use invoicing software
Invoicing software, such as BuildOps, makes payment a whole lot easier and more efficient. The software can create invoices, proposals and quotes, as well as sending them to clients on a scheduled basis. The process can be automated, removing human error and maximizing your profit margins.