By: First Union | Date:
Is Your Business Struggling To Get Its Invoices Paid?
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Are you struggling to get invoices paid in a timely fashion? Do you have a client that is consistently late with paying their invoices? Are you looking to improve your billing workflow to get paid faster?
Getting your invoices paid faster starts with analyzing which customers you struggle with and why you struggle with them. Review the reasons they have noted as to why they were late with a payment, and any trends you may have seen over-time with their late payments. Once you have an idea of what you're working with, it'll be easier to determine which path you should take to get paid faster.
Create a Routine for Yourself and Stick to It
Before you change your invoicing workflow, communication with your clients, and the verbiage in your contracts, look at your billing routine. Could you send an invoice out sooner? Should you consider extending when a client's payment is due?
Create a consistent routine with how you invoice your customers. Create a workflow that fits all client types (those who pay the second they receive their invoices and how to handle late payers/). Track everything and be clear with the status of each invoice. Once you are organized, you can then start to pinpoint any other changes that may need to be made.
Require a Partial or Full Payment Before Services are Provided
If you have been struggling to receive payment upon completion of workproject/services, you may consider requiring your customers to pay upfront. The way you rationalize this with your customer(s/) is that they are paying to retain your time based on your quote/invoice, no matter the percentage you require.
Make sure to review the terms of your contract. Also, if you are changing up payments with a recurring customer who struggles to pay on-time, make sure to not start any work without upfront payment. It may be an awkward conversation, but you communicate that this payment schedule will be used with all of your customers going forward.
Offer a Retainer for Ongoing Work
Lawyers aren't the only professionals who get to obtain payment for a set amount of time and dollar value. A retainer is a fee paid to a professional for their advice, services, or a claim on services when needed. Typically, retainers work as such:
For $___/month, you will obtain ___ hours/month of work from (contractor/). Retainer work includes:
- Work type
- Work type
You may be asking yourself, why would I list out the work type?
For example, you own an independent website development LLC. You currently have a website build at the finish line, but you know that your client will need website updates and server maintenance moving forward, as the client does not have a System Administrator on-staffavailable.
You offer a $400/month retainer, which includes 10-hours of work each month. You let them know that any website and plug-in updates that come in on the back-end will be completed. In the retainer, you include that after the 10-hours, the client will be charged at $75/hour. Additionally, you include that any new website pages are not included in the retainer, as that type of development is typically charged at $75/hour.
You agree the retainer is to be paid on the 1st (no later than the 5th/) of every month, upon receipt of invoice. You agree the retainer be paid even if the last month yielded zero outcomes because YOUR TIME HAS BEEN RETAINED.
Retainers work for both you and your clients. You have a "guaranteed income" for a set number of hours each month. The client has a piece of mind that there is always someone call away for help. Your client also has a piece of mind knowing that the invoice each month will be the same unless additional services were agreed upon and that the invoice will come in at the same time each month.
Take Payments in Different Ways
You may have a few customers that cannot use certain means of payment. Also, by offering all different payment types, you open yourself up to more business. In addition to cash and credit cards, consider taking payment with:
- Google Wallet
Offer Early Payment Incentives
Take a different route by offering an early payment incentive.
For example, many States provide early payment incentives on annual property taxes. Many States will provide an incentive in the form of a percentage cut if paid by a certain date.
In the state of Florida, the following 2020 property tax incentives exist:
- 4% discount if paid in November
- 3% discount if paid in December
- 2% discount if paid in January
- 1% discount if paid in February
- The gross amount is due by March 31st
This is just an example of what you can provide to your clients. If a client's bill is due by the end of the month, but they pay within five days of receipt, you may consider providing a discount. Take a look at what incentives you can afford to provide, so you can get paid faster.
Add a Late Fee or Interest Charge
Make sure your contracts include a late fee or interest charge. Some clients may not like the sound of this, but it should encourage them to pay their invoices in a timely fashion. If a client knows they may have to pay more in the long run, they are more likely to make payments on-time.
Kill Your Clients with Kindness
Still, struggling to get your clients to pay on time? When communicating with them, be as kind and gregarious as possible. Provide them with no excuse to not pay you. It may seem like a small detail, but when trying to get paid, taking a step back to basic kindness can go a long way. You may even see your payment come through after a kind and connecting conversation.
Restructure Your Contract's Terms
If all else fails, it's time to restructure your contract. It may feel like a huge overhaul, but in the long run, it will save you a lot of time. The restructuring provides more certainty.
If after restructuring and implementing changes to improve getting paid faster, and a client is still late, you know you have done your due diligence. Know that when it comes down to the client being tardy, you have everything to move forward to gaining repayment, no matter what means you find fit.
Looking to Cover Your Costs?
If you find yourself needing to cover costs associated with late customer payment, you may need financing. First Union Lending is here to help.
We have nine different business loan types to choose from. This means that we're uniquely qualified to help you find the perfect loan to open your small business.
Applying for a business loan doesn't affect your credit. Better yet, your business loan may be approved as soon as the same day.
To discuss our business loans with one of our lending experts, click here or call 863-825-5626. We'll talk about our various business loans and help you find the right one to open your pain clinic.
Get started with the process now by learning more about our business loan types here.