When you’re running a small business, you need to make sure you get paid regularly and on time by clients. They might be keen to delay or spread payments, or simply not prioritize your invoices if you’re a small operation providing a small service for them (however vital). For you, however, having a regular revenue stream is vital to pay your bills, your employees, and think about expansion.
Getting paid on time is a skill you can learn, and it quite literally pays to get good at it. Reading this guide today could mean money in your pocket tomorrow!
Get Good at Talking About Money
Firstly, you need to be able to discuss money and payment openly. It can feel awkward to discuss payment terms upfront, or chase after an unpaid invoice, but freezing up when you need to talk about these matters means you are open to being taken advantage of.
It will help you in when negotiating your rates to have a clear idea of how much your time and expertise is worth, so do your research before you pitch. Be honest in assessing your experience and quality and look at what others working at the same level are paid. Also, try looking at job listings: look at the salaries of jobs you’re qualified to give you an idea of what you’re worth. Be proud of it.
Get it in Writing
As with any other legal contract, make sure that when you agree to provide services or goods for another business, your payment terms are covered. Regardless of your good relationship with a client or their apparent trustworthiness, it’s wise to ensure your payment terms and time table are detailed in the legal document you sign.
This creates peace of mind for both parties: you know there is a legally enforceable document telling the world how much you are owed, they know you’re bound to provide the exact service you’ve signed for.
It’s also worth ‘training’ your existing clients into good habits. Think about putting together a table of sliding scales that incentivizes clients to pay you in good time, and disincentives them for paying late.
Consider offering a small discount for early payment. Calculate this carefully: it shouldn’t be something that would bankrupt you but does offer an incentive to clients. Similarly, adding a small interest payment to your invoice in the event of late payment will help to keep them in good habits.