As a small business owner, you rely on your clients paying you for your services.
It’s also likely that you don’t have the cash flow for them to be paying you late.
Late payments create work for you and make it harder for you to run your business.
However, there are some simple ways that you can prevent this from happening.
These include setting clear payment terms, issuing the invoice straight away and following up with the client when they don’t pay you.
Check out our 7 favourite tactics to get your invoices paid faster.
1. Send the invoice straight away
One simple way to encourage your customers to pay your invoices faster is to issue your invoice immediately after you’ve completed the job.
When you issue the invoice straight away, the project you’ve completed is fresh in the mind of your client.
They’re more likely to pay you earlier than the due date of the invoice and less likely to question the work you’ve done for them.
It will also demonstrate that you’re a professional business operator and that you should not be taken advantage of.
You’re also less likely to make mistakes on the invoice about the details of the project if you issue it straight after completing your work.
2. Late fees
If you really want to deter your clients from not paying invoices on time, you can include a penalty for all payments made after the due date.
The threat of having to pay more if they pay late is usually enough to ensure that clients pay their invoices.
To add late fees, you must clearly write this into the payment instructions or terms of conditions on your invoice.
For big jobs, you’ll want to write this into your contract.
If you are to add late fees, they must be included in the very first invoice you send and you’ll also want to notify the client verbally before you begin.
Springing late fees on them without having proof that you clearly indicated to them that they applied will only make your business look unprofessional.
3. Offer a discount for paying early
If you want your clients to pay earlier than the due date, you can offer a discount if they pay in advance of the due date.
It doesn’t have to be a massive discount, even just two percent can be enough to motivate your client to pay earlier.
If most of your clients are small businesses, a good portion of them will use any opportunity for a discount that they can get.
Including an incentive will also encourage clients to use you again in the future.
Remember that business is all about building good relationships and offering something positive like a discount can be worth it in the longterm.
4. Follow up on late payments
Do not sit around and wait for your clients to pay you.
If their payment is late, follow up with them.
You are more than within your right to send them an email even a day after the due date.
You provided the services/products and they need to pay your for it.
Be polite and direct with the client while doing this because at the end of the day, you don’t want to appear unprofessional.
There might be an issue with the invoice which is preventing them from paying you so don’t automatically assume that the client is at fault.
We have some handy tips on how to do this in our How to ask for a payment tutorial.
5. Accept more payment methods
You might want to receive the payment in a certain format.
However, that might not be an easy way for your client to pay you.
At the end of the day, it is better that you get paid than not get paid because you wanted them to pay you a certain way.
Offer multiple ways to pay you and make it accommodating for them.
You can make it known to them that you would prefer them to pay you in a certain way because they’ll generally be happy to pay you that way.
You can even offer a discount if they pay you in a certain format to encourage them to use that payment method.
6. Make sure your invoice details are correct
One of the most common reasons for a late invoice payment is the wrong invoice details.
Make sure that every detail from your company’s details to your client’s details to your payment instructions are all correct.
An invoice is meant to represent a transaction but if the details of the transaction are wrong, it won’t work.
Read over the invoice carefully before you send it because if you have the wrong prices or the wrong due date, you might not be able to change them.
Also, make sure that it is easy to read your invoice before you send it.
If the customer can’t clearly see what they need to pay you, they could pay you incorrectly.
7. Ask for a deposit or prepayment
Asking for a deposit before you begin the job is a common practice if you invoice large amounts.
Even if the client fails to pay you, you’ll still have some of what they owe you to help you cover expenses before you get the rest of your money.
You can also add several payment milestones throughout the project.
That way if the client fails to meet one, you can halt the project before you spend too much time and money on the project.
It’s also common for some types of businesses to ask for full payment before starting the project.
This is the safest method for ensuring you get paid but if its not common practice in your industry, you might want to avoid it so you don’t come across as difficult to work with.
The most important lesson to always keep in mind is that you should always look after your customers.
That doesn’t mean letting them take advantage of you but you won’t gain anything by coming across as hard to work with.
Treat you customers well and always act professionally.
If you need to make an invoice for your business, you can do so using Bookipi Invoice.
You can make as many invoices as you want for free!
Kick start your entrepreneurial career with Bookipi.