Anyone who has been in the entrepreneurial game for over a month can testify just how difficult collecting what they’re owed for their services can actually be. There is no denying that there are many hurdles on the road to long-term business success in the competitive market, but the biggest one might just be your clientele, and not the economic trends, or the strength of your competitors.
Quite simply, when a client doesn’t pay the bull when they’re supposed to, your entire operation can suffer, and that includes your hard-working employees. Here to help you preserve your brand’s reputation while getting paid in full are the effective invoicing tips you should follow.
Diversify your payment options
The reasons why clients don’t pay the invoice in time are numerous, stretching from the lack of resources all the way to the sheer unwillingness to compensate you for your services. There is no telling whom you might come up against on the road to business success, but that doesn’t mean that you can’t make it easier for every client to pay what you’re owed.
The first solution is to give them the freedom of payment they’re looking for. Accepting electronic payments is the foundation of a solvent company, but you want to take the concept a step further than that. Consider diversifying your payment options to numerous payment types ranging from payment platforms, to accepting all types of credit cards, checks, mobile payments, etc.
Invoice your clients promptly
In most cases, a client will have a month’s time to pay your invoice from the moment you send it out. So why would you wait to send it a minute after you’re supposed to? Every moment you wait is costing your revenue and damaging your cash flow, which is all the more reason to invoice your clients and customers as soon as possible. Don’t worry about coming off as avaricious or intrusive, this only shows your professionalism and the willingness to give your clients enough time to meet your fees.
Another effective method is to follow up your electronic invoice with a phone call, asking for confirmation that the invoice made it into their inbox, and confirming the payment terms and due date. Be sure to approach this with a delicate touch and professional demeanor, so as not to come off as insistent or greedy.
Get paid no matter what
If you’ve been in the entrepreneurial game for some time, you might have heard about invoice factoring and the potential it holds for preserving a positive cash flow when the going gets tough. Also known as business factoring in the commercial world, this type of cash flow management serves to supplement your finances through a line of credit until your clients meet their outstanding payments.
This is an excellent way to preserve your cash flow if you can’t wait for your clients to meet their payments, or if you’re working with clients who are regularly late. It’s also a great way to preserve your brand’s image in the competitive market and uphold trusting relationships with your clients. You can turn your invoices into cash immediately and let the factoring company take over the waiting period.
Incentivize early payments
Without a doubt, the majority of your clients will wait until the very last second to pay your invoice. While that is completely within their rights, what happens if they start stretching out that period and deliberately overstepping the due date? You need to take control of the situation and incentivize your clients to pay the invoice early rather than chasing them around for months on end.
One way you can achieve this is to create an early-payment reward program in which your clients can earn special perks and benefits if they choose to pay the invoices promptly. For instance, you can knock two percent off of the invoice when your clients pay within the first ten days of invoicing. It’s a neat little trick that might ensure a healthy cash flow and help you stay in good terms with your clientele.
Hold off work until paid
Before we tackle this last point, a word of caution. Executing a hostage situation is never the best idea, especially in a competitive business climate, however it can be highly effective and it might help you get the money you’re owed sooner than later. If your services are truly par excellence, then you can gamble with this method and expect to come out as the winner.
On the other hand, if you’re just starting out and are yet to prove your worth to the world, then holding off further work until being paid might not be such a good idea. You can rest assured that your clients won’t have a problem leaving you for the next best thing if you don’t play your cards right, so consider other options before you give your clients an ultimatum.
Collecting outstanding payments is not an easy task in the modern business world, but that doesn’t mean that you’re left at the mercy of unpaying clients and customers. With these tips in mind, you can create a sound compensation strategy that will ensure a positive cash flow for your business, and help you pave the road to a solvent future without losing face in front of the rest of the industry.