From freelancer to big business, the best way to keep your cash flow in the green is to get paid on time.
This may seem like an obvious answer but the truth is, many business owners still struggle to streamline their invoicing process.
Here are five ways to get paid faster so you can worry about scaling your business instead of chasing down deadbeat clients.
1. Utilize the Right Tools
First and foremost, if you aren't already completely paperless you should try your best to move toward it. By sending, receiving, and managing your invoices online you will surely save yourself time and money. There are plenty of online invoicing platforms out there that will solve your billing issues with ease. Here are a few that I would recommend:
- Due: Due is an online invoice, time tracking, project management and credit card payments platform designed to help companies of all sizes with its scalable solution.
- Freshbooks: Freshbooks is small business accounting software that offers features like invoicing, expenses, time tracking, payments and reporting.
- Quickbooks: Quickbooks is a full-service accounting platform that also provides tools for invoices, online payment, and financial analysis.
- PayPal: PayPal offers a simple and effective invoicing tool that has some customization and provides for online payments from customers and clients.
It's important to choose the right solution for your business. The majority of these platforms offer a free trial and or demo so you can shop around a bit before making a final decision.
2. Find the Right Contact
Whenever you're ready to send out your invoices you need to make sure you are sending them to the right contact. The person you are communicating with may not be the one in charge of the books, so sending them bills will only delay the process further. Make sure to establish a relationship with the right contact at the beginning of the job, that way you can cut out any middlemen and get paid on time.
3. Timing is Everything
Just like most things in life, timing is everything. The general rule of thumb says that Sunday is far and away the worst day to send out an invoice, in contrary Thursday's statistically seem to be the best day to send an invoice. If you are sending out recurring or interim invoices, be sure to make the payment intervals crystal clear in the agreement. Set deadlines and make sure your client respects your time.
When setting your payment deadlines don't be afraid to ask for expedited payment. Typically invoices are asked to be paid within 30 days, typically clients will pay within two weeks when given a 30-day deadline. Ask for your invoices to be paid within 10 days or even a week for quicker payment. As long as you're respectful and professional your clients won't have a problem paying you sooner.
4. Invoice Effectively
The less work you give your client when invoicing them, the quicker they will pay you. As you start to deal with repeat clients, this process will become more seamless as time goes on. For new clients, understanding this is imperative. Here are a few things to keep in mind with new clients so you can create the "perfect invoice."
- Fully discuss payment terms before you get started: You want to leave little to no room for confusion when you send your final invoice. The best way to do this is to agree on terms before the project is started and sign the agreement before you begin any work.
- Keep very detailed records of time and inventory: The more detailed your invoice is regarding hours spent/other billable expenses the less confusion your client will have come pay day.
- Less is more: Keep your invoices as simple as possible. All the extra fluff looks nice but it won't get your bills paid any faster.
In nearly all aspects of business, the follow-up will be used time and time again. Odds are you will need to follow up multiple times with multiple clients, just know each time you'll get better at it. When a client misses their deadline here's what you do:
- Resend the invoice with a reminder: The first step is to simply resend the invoice with a friendly email reminder.
- Call the Client: If the invoice still isn't paid, make sure to call the client. If they don't answer the phone leave a message so you can speak at a later time. Ideally, you can get your client on the phone and have them pay the invoice while speaking to you.
- Legal Action: If the client is still dodging your emails and calls you can always take legal action. This is a rare ocurrence and often times is more expensive to pursue than the actual payment but it is still an option.
Being a small business owner is often a stressful line of work. The last thing you want is to get caught up chasing down clients who are late on payments when you need to be focusing on other aspects of your business. Use these five ways to get that money in the bank so you can continue to hustle.