Owning a small business is a huge undertaking – there are many different things to keep track of. Ensuring your customers pay you on time for your product is essential to keeping your books in the green, but sometimes this can be challenging. Consider these tips to help you get paid faster so you can spend more time and energy on the many other tasks involved in running your company.
Stuart MacDonald, Chief Marketing and Revenue Officer for FreshBooks, says “it’s hard to anticipate all the administrative aspects involved in being a small business owner; the primary one being how to get paid on time. There is indeed an art to mastering one’s billing and we’re happily sharing the secrets to success.”
Here are some strategies to help simplify your billing process, according to MacDonald:
- Make your expectations clear on day one. Start a new habit of signing a contract with new clients and clarify your payment terms, including late payment policies, to avoid misunderstandings down the road.
- Review the terms on your invoices. Be sure to read the fine print on your own invoices to confirm that the terms are in line with your company’s policies. Be polite, use plain English to avoid confusion and include terms about late payment fees.
- Send out invoices early and often.”The sooner you invoice your clients, the sooner they pay you,” MacDonald says. “Each time you are due a payment (usually on a deliverable), send off an invoice.” Consider breaking big fees down into more manageable chunks to make it easier for clients to pay your on time.
- Always follow up on outstanding payments. Invoices can sometimes take anywhere from three weeks to four months to get paid. Follow up with your clients on invoices you’ve sent to ensure they don’t slip under the radar.
“Getting customers to pay on time is one of the biggest challenges for entrepreneurs as the economic recovery drags on,” states Catherine Clifford of the website Entrepreneur.com. “And when the problem persists too long, it can ultimately shut down your small business.”
Small business consultant Dawn Fotopulos listed a few tips on getting paid faster:
- Explain every charge. Itemize everything the customer has bought or every service you provided instead of sending an invoice with one total dollar amount. Clients like to know exactly what they’re paying for.
- Build a personal connection. Get to know the person who will be handling your invoices. Send them a handwritten thank-you note on a regular basis; make sure that person remembers you so you become a person to them and not just another vendor.
Cash flow is crucial to running a successful business, so ensuring that your clients pay you on time is important. Incorporate these tips into your regular accounting routine and you’ll not only see a more constant flow of funds into your company, but you’ll have more time to focus on other important parts of running your company.
