How Small Businesses Can Get Clients to Pay Quickly
For startups, not getting paid on time can have detrimental effects on other aspects of the business. You need the money to pay your vendors, employees, utilities, and other expenses that are supposed to come from your cash flow. But what if some of your clients are not paying on time?
If a client does not pay on time, whatever their reason might be, you don’t need to get your preferred process servers to conduct debt collection right away. Here are some strategies that you can use instead:
1. Set expectations right away
When you’re going over the contract with a new client, make sure that the discussion about payment terms and schedules is crystal clear. Emphasize the consequences of not paying on time to let them know that you won’t be lenient about the matter. By setting these expectations early on, clients can prepare their finances accordingly, and there won’t be any surprises down the road.
2. Send invoices on time
Sending invoices on time will show your clients that you value punctuality and urgency. As a result, they might do the same in return when it comes to making payments.
If you or your team don’t have the time to send invoices to every client, consider outsourcing to a freelancer or virtual assistant. In this way, you can still stay on top of invoices even when the rest of the team is busy working on other tasks.
3. Make gentle reminders
When the payment date is approaching, send gentle reminders to your clients via phone call, text message, e-mail, or letter. A client might unintentionally forget about a payment date. Hence, sending them a reminder can give them up a heads-up about the approaching due date and increase the chances of them paying you on time.
4. Establish late fees and enforce them
The prospect of paying an additional amount of money is enough for most clients to pay their bills on time, even when they are habitually late payers. Ensure that you have the late fees written on the contract so that your clients won’t be surprised when you add a late payment to their bill. Then, don’t forget to enforce the policy. Clients already know the consequences of paying late. It won’t be your fault if they don’t respect the terms.
5. Be friendly
When clients are treated more than just a source of revenue, they will want to pay you on time or even earlier than expected. Make your clients feel special once in a while by offering exclusive promotions or services, mentioning them in your content, or going the extra mile to solve an issue for them.
Not only does having a friendly relationship with your clients help you get paid on time, but it also increases the chances of them repeating business with you.
6. Ask for up-front payment
Many clients will not be willing to pay 100% of the bill up front because they want to see the work first. So instead of asking for the full payment, negotiate for a portion that can at least pay your bills if they conveniently disappear after the work is done.
The effectiveness of this strategy depends on the type of business you run, but it’s always worth a try, especially if you can’t afford to have a client running away from a payment.
7. Offer incentives
Incentives can motivate clients to pay on time or pay earlier than the due date. Offer something small and doable like company swag, product samples, or a free service. It’s an effective form of positive reinforcement that will prompt them to pay on time and continue doing business with you as well.
8. Simplify payment schedules
Use a consistent payment schedule so that your clients will have an easier time remembering their dues. For example, if you started with a 30-day schedule for the first billing period, use that same schedule for the rest of the contract term.
9. Consider your clients’ preferences
Making payments easier for your client will, in turn, help you get paid on time. Ask your client how you can make payments easier on their end and frame the question to emphasize the benefit to them. In addition to encouraging punctual payments, this strategy also makes your clients feel special.
Not getting paid on time–or worse, not getting paid at all–is one of the most frustrating things that startups often deal with. While there will always be a late-paying client here and there, these strategies can help you encourage even late-paying clients to settle their bills on time.