Getting paid for your work is one of the biggest headaches every small business owner faces. Just ask my business partner, who handles our accounting! You deliver the goods, but when—if ever—do you get the money? In most cases, not right away. In some other cases, it seems like “the check is in the mail” for years.
How can you get paid what you’re owed faster, enjoy better cash flow and stop stressing about money? Here are eight time-tested tips to try.
1. Send Invoices Right Away
This tip sounds incredibly obvious, but you’d be surprised how many small business owners forget to invoice for work they’ve completed. Your clients aren’t going to tell you that you haven’t billed them, so the responsibility of asking for your money is on you! Try using a free invoice template so that your invoices are easy to generate, have a consistent look-and-feel, and contain all the data necessary to getting paid quickly.
Unless your relationship or contract requires a monthly invoice, develop a practice of invoicing clients as soon as the product or service is delivered. It just gets things moving faster.
2. Get the Details
Especially when you’re dealing with larger corporate or government clients, invoices can easily get lost in a maze of bureaucracy. Never send an invoice out blind. Always make sure you know the specific department, individual, email and/or mailing address to send your invoice.
Once you have that contact, get in touch and find out what format the client prefers. For example, some clients may require you to use a purchase order number on the invoice. If that’s the case, accommodating their requests could mean the difference between prompt payment or none at all.
3. Style It Right
It’s sad but true. Professional-looking invoices are more likely to get attention—and get treated as a priority—than something that looks like you printed it out on your grandma’s dot-matrix printer or typed it on the first scrap of paper you could find.
Look for tools with invoice templates that let you create custom invoices featuring your business logo. Use bold colors (e.g. red, highlights) wisely to emphasize the key parts of the invoice, like the total amount and the due date). Keep it simple; a cluttered, overly detailed design will only confuse the recipient.
4. Go Digital
If you’re still mailing out physical invoices to your customers, you’re adding a lot of unnecessary delay into the payment process. Instead, start emailing customers online invoices, and set up your business bank account so you can receive electronic payments. Many customers actually prefer this method.
5. Offer Incentives
Sweeten the pot and speed up payment by offering customers a small discount for paying early. Make sure the financial tradeoff is worth it before you extend this offer, however, since you don’t want to offer a discount that you can’t afford.
6. Get Mobile
If you regularly deliver products or services to customers in their homes or offices, consider using mobile payment technology to accept debit and credit card payments on the spot. It’s as simple as downloading an app to your mobile device and then swiping a payment card. This is a simple way to streamline the payment process even more because you don’t need to invoice customers at all.
7. Stay on Top of Your Numbers
If you don’t already do so, implement an accounting software program that syncs with your business bank account and enables you to easily view your real-time cash flow situation at a glance. This way, you’ll know when cash is running low, so you can step up your efforts to collect on invoices.
8. Follow Up
One of the most common reasons small business owners don’t get paid on time is that they never follow up on late payments. Use your accounting software to set reminders when payments are due so you can follow up immediately, by which I mean “the next day.”
Most of the time, you’ll discover the delay is due to an easily resolved issue, such as a misdirected invoice or an unclear amount. But you won’t find out about the problem until you check in. After all, the customer likely isn’t eagerly waiting to pay you. Develop a polite standard follow-up email or voice mail you use with customers whose payments are past due, and you’ll soon find things speeding up nicely.
By implementing these simple steps, you’ll soon find yourself “in the money.” For more information on how to run your company successfully, read our article about how to bring more cash into your business.