If you happen to be running a small business, you’re probably already aware of the challenges that come with it, from delivery hassles to dealing with customer complaints and everything in between. However, probably the most essential concern of smaller companies is ensuring that they get paid in a timely manner.
This concern is usually eliminated if you’re in the kind of business which requests payment upfront, or in advance, but for other types of businesses which offer services for which they issue payment after, it can sometimes be problematic to ensure you always receive what you are rightfully owed.
Luckily, there are a few measures you can adopt to ensure you get paid on time.
Sign a Contract
Before thinking about issuing any invoices, you should have considered the possibility of getting a signed contract. Having everything in writing acts as proof of your work to the client and makes it less likely for them delay or forgo payment once the work has been completed.
Naturally, this doesn’t have to be too extensive or technical; a simple document stating the nature of the work, the time frame and the terms of payment and when it is due. Make sure it is agreed upon and signed before you begin any work for the client as it’s a form of insurance you don’t want to be lacking.
Set Up a System
As a small business, you’re probably used to working in a somewhat ‘disorganised’ way to get all the work done on time; however, putting in the effort to get a proper invoicing system set up will prove extremely helpful to ensure you don’t have to waste more time chasing down your money.
A cloud-based system that can be easily backed up is much easier to consult that a plethora of word documents or spreadsheets. Your system should be able to carry out basic invoicing and accounting duties and help you to keep track of your finances and the money you’re owed.
If you only accept one or two forms of payment, you’re basically making it easier for certain clients to find excuses to come up with the cash. By broadening your payment options you’ll be making life easier for both your clients and yourself; if customers can pay you through a wide array of methods, it will quicken the process along nicely. At the end of the day, it doesn’t matter what form your money comes in just as long as you receive it.
Moreover, make sure you issue invoices promptly to avoid clients taking longer to pay. Always provide all the information they may require such as banking or postal details so there’ll be no room for excuses.
Early Bird Discounts
It’s a good idea to think about offering discounts on early payment; this will definitely make it more likely for customers to pay you sooner rather than later if it means they can make some small saving on their bill. Make customers aware of this kind of incentive by clearly displaying it on your invoice.
By the same token, you could also charge a late fee for those customers who delay payment past a specified due date. This would cancel out the early discount and again encourage clients to put off paying you. Just make sure to put this kind of information in your agreement and on your invoice to avoid any grey areas or complaints.
Just because you’re the little guy, it doesn’t give you the excuse to ignore standard business terms. Measure your payment expectations against the market realities.
This will give you a clearer idea of when you are likely to get your cash and if this can be offset with any expenses you need to make in the meantime to provide your service or product.