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Owning your own business can be a huge bonus to your life. You have freedom. You have flexibility. You can set your own hours. You like your boss (hopefully.)
Yet, at the same time, when you’re in business for yourself, you also take a huge amount of risk in terms of being paid by your clients- your cash flow is directly related to that of your clients.
Cash flow is the number one problem of a failing or ailing business, so it’s crucial to keep the cash coming in.
Here are five ways you can get paid faster:
1) Bill more frequently.
If you normally take a deposit and bill the rest after the project is done, try, instead, billing in smaller, more frequent increments- perhaps once a week, or after every 10 hours, rather than once a month. Clients may find it easier to pay a smaller invoice faster, and this also keeps you from working without payment. With the ease of online invoicing, this should be quick to implement.
2) Incentivize for early payment.
If a client pays early, or in full, consider offering some kind of incentive for fast payment- especially if the bill is large. If you offer a 3% discount for payments made within 7 days, you can often receive your payment much faster, and your client feels good about paying early.
3) Tighten up your late fees.
This is a preventative measure, one you can put in place now. Always have a late fee for unpaid invoices. You might decide not to charge it, but have one in place. Begin charging this late fee the day after the invoice is due.
4) Offer multiple ways to pay.
Make it easy for clients to pay you. Offer to accept payments by check, wire, bank-to-bank transfer, and have at least one option like Paypal in addition to the usual credit cards you accept. Also be willing to accept payment in multiple forms- meaning if a client wants to pay part by check, part by credit card, make this easy to do. Yes, it is a bit more hassle for you, but this is your money.
5) Charge in advance
When you can, charge in advance and collect your money up front. This works well if you are offering packages or groups of hours. Many coaches, consultants, and virtual assistants use this model successfully.
The longer an invoice goes unpaid, the more difficult it becomes to collect upon. When you have a late invoice, follow up on it promptly. Call and find out when the invoice will be paid, and keep following up until you receive your money.
It can be uncomfortable to feel like you’re “chasing down” the dollars, but better do this than not get the dollars at all!