Not getting paid on time by your clients can be a real headache for any self-employed person. After you’ve sold your product or service, it’s easy to sit back and relax thinking your job is finished. However, if you leave it too long to chase up payments from clients, it can be damaging for your self-employed business accounts. This is why it’s important to get your invoices paid quicker. After all, nothing is set in stone until you’ve been paid up! Here’s 10 useful ways to help get your client’s cash into your bank account and avoid the hassle of a long, drawn-out payment process.
1. Send invoices sooner
If you’re slow to invoice customers, it’s likely they’ll think you’re not in a rush to be paid. Therefore, it’s a good idea to send an invoice laying out a realistic time frame, preferably the earlier the better. We all know that accounting for the self-employed can be overwhelming. Nevertheless, it’s vital your payment terms and dates should be agreed from the beginning of an order. This should lead to little chance of any confusion. This way, a client has straightforward expectations which align with your payment plan.
2. Set out payment terms
When you first land a contract or order, clearly state how many days they have to pay you and which payment methods are available. It could be that a customer only pays on a particular day of the month, for example. To avoid any misunderstandings, ensure both parties are aware of how each other works. Staying on top of the paperwork while being self-employed can often be quite stressful so it’s crucial to stay consistent with your payment plans. This will enable a client to know exactly where they stand and you have everything in order.
3. Be clear in an invoice
It may sound obvious but you should keep your invoices simple and direct. In doing this, a customer knows exactly what you’re asking them to pay for. For example, if you’re using sales or purchases, make the order, reference or invoice number clearly seen. Alternatively, if your invoice combines more than one job or a part of a project, precisely state what the invoice covers by breaking it down into separate tasks. Another point to remember is to ensure the design of your invoice has all the relevant information easy to find. To make it easier, use the same invoice template to stay organised.
4. Research clients and get paid up front
It’s exciting getting a new project or a large sales order for the first time. But how well do you know the client? Doing some simple research on a potential customer can arm you with vital information to save you from losing out further down the line. One way you can do this is to run a business credit check for a valuable insight on how a business is doing. Similarly, for bigger or longer projects, you could ask for a deposit up front. This will guarantee some cash flow to cover any costs and help lay out expectations with a client.
5. Offer different ways to pay
The days of waiting around for a cheque to clear have pretty much disappeared. To make things more convenient and run smoother, offer your clients different ways to pay an invoice. Consider accepting online payment options through a company such as Xero. Taking credit card payments using a built in accounting system will make it easier for a client to simply click and pay. Additionally, providing multiple ways to make a payment will also give your customers more flexibility to decide how they want to pay you. This will hopefully, get your invoices paid quicker and with less hassle.
6. Communicate effectively with clients
From the beginning, make sure you know who exactly to send an invoice to. This is one of the first rules of self-employed accounting. There’s no point sending an invoice to the sales team if you need to send it to the accounts department. When possible, get to know your clients personally; this is likely to speed up the process and is less hassle if you have to chase up a payment later. Poor communication sets a negative precedent and, as every client is different, take time to get to know them to build up a good relationship.
7. Give away small incentives
Who doesn’t like saving a few pounds? Giving away small incentives in return for early payments could make such a difference to how soon customers pay up. This could range from a small percentage off the final price, sending out company promotional products or exclusive access to an additional service or benefit. By incorporating this strategy, you’re rewarding customers who pay early and increasing the chances of them returning to you for more work or products. That said, make certain your self-employed business can afford to offer incentives, however small.
8. Be polite and follow up
There are many reasons why a customer might not pay up immediately. It could be as simple as not realising the payment date was overdue or even that they simply forgot! Therefore, if a client is late paying, be diligent about chasing them up. A gentle and polite initial reminder can be brief but include the essential information they need to know to make the payment. If this isn’t successful, send frequent reminders, either by phone or email, until they pay you. Stay on top of your business finances so you don’t just muddle through the book-keeping aspects of keeping your work afloat.
9. Set penalties for late payments
To get your invoices paid quicker, outline a late fee policy in your contract or sales invoice. No one wants to pay out for extra charges so it encourages clients to pay up on time. It’s also useful to have a discussion with potential customers before you start working for them. This helps to avoid any surprises down the road. The amount you charge should relate to the amount of work done or orders placed within a certain time frame, e.g. if an invoice hasn’t been paid within 14 days.
10. Stop working for the client
The last thing anyone wants is to actually stop working or sending orders for a client. However, in extreme circumstances, you could be left with no choice if you want to keep on top of your self-employed accounts. When you’ve tried different tactics and a customer still hasn’t paid, then you should stop the contract altogether. Hopefully, if you use these tips, you won’t get to this awkward moment, but protecting your business is paramount above all else.
Finding the balance between appreciating your clients are busy people and thinking they could be stringing you along can take time to get to grips with. However, staying calm and maintaining a positive relationship with customers, whatever the situation, will help you to keep the doors open for future work opportunities. It will make sure you get your invoices paid quicker too!