Encouraging Clients To Payposted by Andrea | 05/5/2012
One of the hardest parts of running a business (at least for me) is deciding what I’m going to charge for my services… and then making sure I actually receive payment for those services.
I don’t want to seem greedy or money-hungry — but at the same time, I’m not willing to work for free. As many of you know, there are lots of expenses involved in running a business, so it’s essential we receive timely payments from our clients.
If you’ve ever struggled with clients who won’t pay, here are a few ideas to help you collect those payments — and prevent future problems.
Make it really easy for them to pay.
Even though PayPal takes a small fee, it’s often the best payment option for many small businesses because it is safe, secure, well-know, and fast. Plus, they accept all major credit cards, debit cards, and work with most banks, so it’s really easy for your clients to pay.
State your payment terms clearly.
Before you even enter into a working partnership with a client, make sure you are BOTH clear about the fees charged and your payment terms.
Will you charge any mileage fees, tax, shipping, handling, etc? From the client’s perspective, it’s really annoying to have all sorts of unexpected fees tacked on to their bill.
When do you expect them to pay? Will they pay immediately once the goods/services are received? Will you bill them at specified intervals? Will you require a full or partial pre-payment?
Go over all these details with your clients and include your payment policy in a Client Agreement Form that both you and your clients sign before doing business together.
I don’t require pre-payment for all of my services, but I do require a full pre-payment for all my coaching services.
I have found that most clients don’t think twice about a pre-payment (or partial pre-payment) and it’s a nice security net for business owners.
Invoice promptly after the goods/services are provided.
Don’t allow too much time to lapse before you send out your invoices. I like to do mine on a weekly basis just so I stay on top of things and don’t forget.
Plus if you wait too long, there’s the possibility that the client will forget — or even change locations.
Offer a discount/reward for clients who pay in full.
Depending on the type of products and services you provide, you might want to try offering a small discount or an extra reward for clients who pay up front and pay in full.
Even though you’ll take a small hit financially, you’ll save so much time — plus that money will be available for other uses several weeks or even months in advance.
Establish a follow-up procedure.
Hopefully you won’t have to use this procedure, but it’s good to have one set up just in case.
How long will you wait until resending the invoice? Will you contact them by phone, email, letter? Will you send the issue to a collection agency if necessary? Do you even know who to contact if you need to contact a collection agency?
Money is always a tricky subject for small business owners — especially if you’re doing business with friends and family — but by keeping everything professional and using a few of these tips, you’ll hopefully be able to avoid many issues and promptly receive your payments.