No matter what business you own, its success relies upon receiving timely payments for the product or services rendered. While many clients pay like clockwork, others may overlook, ignore or otherwise postpone putting the check in the mail. Get control of these delinquent debtors by implementing the best accounts receivable practices in your business.
Put It in Writing
The first step in ensuring clients pay on time is by establishing a written contract ahead of time. Preparing a formal contract will not only provide you the opportunity to clearly state your payment terms, but help better define the project scope and other non-negotiable terms of your agreement. Be sure to include monetary penalties, if payment is not received by the stipulated due date. Don’t be afraid to draw their attention to your payment terms before they sign on the dotted line. It’s better to address potential problems now than after the product or service has been delivered.
12 Tips for Timely Payment
Ensuring prompt payment not only depends upon how you manage your clients, but how you mange yourself as well. Protect your business from getting stuck with the bill by following these client collection tips below.
- Run a credit check on all first-time buyers.
- Be sure to research new clients beforehand by checking with the Better Business Bureau.
- Review invoices closely before issuing to your client. Even the smallest mistakes can create delays or refusals in the payment process.
- Request a deposit up front. This is an excellent way to further ensure their commitment, as well as protect you for some of the work performed.
- Expect entire payment ahead of time, specifically for first-time clients or those who have demonstrated delinquency in the past.
- Offer discounts to those who pay early, but be sure the adjusted amount still meets your profit goals.
- Set up automatic online payments with your clients.
- Encourage credit card payments. Make sure you include credit card company fees in your original quote.
- Establish consistent payment policies with ALL clients.
- Maintain a close, yet professional, relationship with your clients. Not only will this help establish a closer working relationship, but better assist you in receiving payments closer to their due date.
- Report late-payers to credit agencies.
- Mistakes happen. Check with your client as to non-payment before taking a stronger approach. Oversights and miscommunications in business occur on a daily basis, so don’t allow an innocent mistake jeopardize an otherwise good business relationship.
Stay On Top of It
The more organized you are when invoicing clients, the more you can stay on top of getting paid in a timely manner. Designate one day of the month to issue all invoices. As due dates draw near, make a call or send an email to clients thanking them for their business…and reminding them of the upcoming due date. If done tactfully, your clients will appreciate the follow-up and cut a check right away!