Doing the job is one thing, getting paid on time is another completely. Follow these 10 tips to keep the cash flowing in.
In this Article:
- Good credit processes are a must
- Keeping cash coming in is imperative
- Take a downpayment or charge in advance if possible
- Always invoice immediately
Never mind cash being king – it’s cash flow that wears the real crown.
We’ve all come across those reports and stats about the number of small-to-medium businesses that go under due to cash flow, and in tough financial times, it’s absolutely essential you keep that money coming in – whether it’s for a small residential job, or a bigger commercial project.
Having strong credit control is vitally important – and while it can be easy to overlook in a buoyant economy, with customers’ belts being tightened and businesses struggling, it’s far from certain you’re going to get that invoice paid when it’s finally issued.
So, what can you do?
Here are a few tips to consider to help you get paid.
1. Get payment in advance
A trip to a Gemcell wholesaler will arm you with a load of quality products, but you shouldn’t have to foot that bill for too long. If you’re buying products for a client, think about invoicing for those products as soon as they’re purchased and before they’re installed.
2. Take a down payment
If you’ve quoted on a job, consider asking for a percentage of payment upfront to lock in the gig. Maybe 25 per cent, or 50 per cent if you’re feeling adventurous. ‘Pay before you receive’ is common practice in many other walks of life, so why should services be any different?
3. Make it as easy as possible for people to pay you
Regardless of whether you invoice in advance, midway through a job or on completion, it’s good to have a few ways for people to pay you. Bank transfer is a given, but can your customers pay you by PayPal or Stripe, for example? You can pass on the additional charges to your clients, who’ll likely accept them in exchange for the convenience.
4. Invoice on time
If you choose to invoice everything at the end of a job, just make sure you do. Invoice, that is. Don’t leave it a month or two (or three or four) to send the client the bill – they’ll have forgotten about it, and the assumption will be you’re not in a rush for the money.
5. Have very clear payment terms
And, on that note, state your payment terms very, very clearly. Thirty days to pay an invoice may be standard for many business customers, but do residential customers really need that? If work has been done – or goods purchased – then payment on receipt is perfectly acceptable, and understandable.
6. Have strict terms and conditions – and late fees – too
As well as having solid payment terms, you need to set out what will happen if those aren’t met. For example, it’s certainly not unreasonable for a payment that’s seven days late to incur a penalty fee.
7. Remember to say ‘thanks!’
If you use accounting software, you can set up an autoresponse email to say thanks for paying. It’s a nice touch and will end the transaction on a positive note.
8. Get a fake bookkeeper
If you don’t have a bookkeeper, get a fake one! Create another email account, give them a name, and send invoices from that account. It’s also great for chasing those invoices, as it doesn’t put your own relationship at risk.
9. Get on the phone
If you haven’t got paid, get on the phone to the client as things are often more easily discussed ‘in person’. As cold as it sounds, though, if the client says they cannot afford to pay, that’s not your problem to solve. Creating payment plans and continually chasing just impacts your cash flow and eats away at your time, too.
10. If all else fails, call in debt collection
If a client’s invoice is overdue (by how much really depends on you, but anything more than 45 days is well overdue), consider calling in the debt collectors. The longer an invoice isn’t paid the less likely it is to be paid, so by taking decisive action now, you’ll increase the chances of getting something back.
