If you run a business, asking to get paid is probably not why you started the business. You’re probably really good at doing your craft/skill, but the invoicing part is just another task that needs to get done. After being in business for over 20 years, I’m happy to share my 10 tips on getting paid:
1. Needless to say, having a good contract is key, so there are a whole bunch of tips on contract stipulations that we won’t get into here. Also, some of the tips below may not work unless you have a contract that enables you to enforce them (and willing to engage in legal action).
2. Send your invoice on a regular basis. For example, if you invoice monthly, send the invoice no later than a day or two after the end of each month. This will get your client into the habit of expecting an invoice when each month ends, and this habit forms the expectation that they need to pay for you to continue doing work in the following month. If you send your invoices at your irregular intervals, it sets a precedence that maybe you are OK with sporadic payments coming in. Most bills that you pay in real life are not sporadic. Set up your invoicing, so it is consistent with the rest of the world that sends invoices at consistent intervals.
3. Make it easy to get paid by offering several payment options. Some people like writing checks, some people like swiping a card, some people like setting up online payments, and some people may even like dropping off a cash or check payment. Typically, the most convenient for you would be for the money to magically appear in your bank account. This is possible with online payments, and this can be done with credit card or debit card transactions. Most online services and apps charge a fee for this, but the fee for debit card/checking account transactions are typically minimal. Most people tend to like the ease of online payments, so be sure to set this up. If you have it set up for a debit card, but not for credit card, don’t worry. Some people may prefer to pay with a credit card so they may earn points, but remind them that credit card transactions cost you an extra percentage, and you could pass that onto them by raising their bill accordingly. Upon hearing this, they will likely just want to use their debit card to save on cost, and it is exactly the same effort as using a credit card. By offering online transactions, in person payments, and accepting mailed in checks, you are keeping everybody happy, and they cannot complain about methods of payment since you have all bases covered.
3. Charge a late fee for all late payments. Commonly invoices have a 1% late fee per month. This is not a very good incentive since one percent of a $1000 invoice is only $10. If all of your clients paid a month late, that one percent is not going to be enough cash flow to get you through. Charge a fixed amount for late payments that really incentivizes customers to pay on time. For example, set your late payments at $50 per day. Or even better, set it at $50 for the first day, $100 for the second day, $200 for the third day, $400 for the fourth day, etc. this will really incentivize clients to pay on time.
4. Instead of a late fee, offer a discount for payment on time. For example, discount each bill with a line item that says $50 off for on-time payments. Most people will jump at that opportunity to save 50 bucks. The opportunity to save money is a better motivator for prompt payment than a penalty for late payment.
5. As a business owner who performs the actual work, it is often uncomfortable or even a conflict if you are also the one that requests payments. Have somebody other than yourself be the person to request payments. If you are a one person operation, make up a fake email address such as accounting@YourBizName.comor even make up a fake name to use as an email alias for someone to have a personality as a real stickler for collecting payments. That way, you are not the bad guy and can focus on delivering the actual service that your clients paid for instead of also being the money stickler.
6. Consider collecting a down payment or retainer. By having your client essentially paying in advance, you have the leverage on ensuring the next payment gets made since you already have their money in advance. This takes a little extra management to keep accounting for the retainer, And for some clients, it can be a turn off. It is never easy to get somebody to sign a contract, and it does make it more difficult if they must also make a retainer payment at the time of signing.
7. This may seem obvious, but make it clear that you will not continue services if there are late payments. Often times, the client says “the check is in the mail,” while they continue to ask for additional services. By refusing to do the work until the payment is actually received sets the standard that your service is valuable and you will not be giving it away to somebody who does not find it valuable enough to pay on time. Use your expertise as the leverage by refusing to let people have access to it before they have paid.
8. If you are in an industry that provides a service for property that allows a lien to be filed against it, be sure to educate yourself on those processes and use them in your favor. Commonly there are deadlines for when a lien can be filed and requirements for notifying the property owner that a lien is a legal right of yours. There are people out there unfortunately who are experts in not paying people. Those lowlifes know the rules for liens, and they will exploit them. For example, they know when the deadline is, and they might use an attorney to write threatening letters or other stall tactics to allow that deadline to pass, so you lose your leverage on filing a lien. If you get close to that deadline, just file the lien. You could always remove the lien later.
9. Never give a discount if a client asks for it. This devalues your service and sets the precedent for future loss of wages.
10. If you made a mistake in your service/product, own it. Bring it up to your client. Give them a discount for it. This allows you to determine what the cost of the mistake was. This prevents the client from using the mistake against you since you already set the terms for it. This also shows honesty and accountability that your client will respect, and in the future, they will have an expectation that you will bring any other errors to their attention (which is much better than them looking for those errors and constantly scrutinizing you). Police yourself rather than letting them police you.
you’d like to learn more about our design process, visit www.josharch.com/process, and if you’d like to get us started on your project with a feasibility report, please visit www.josharch.com/help