Slow and steady never wins the race when it comes to chasing late payments. It is nasty and time consuming especially for freelancers and small business owners. Here are some tips that might help you to avoid late payments and get paid on time.
1. Plug the gaps in customer data
Confirm your customer’s ‘current’ address – both Web and postal addresses. Find out the person who will actually be making the invoice payment and contact him/her. Ensure to use a good invoicing software to keep track of customer data like customer balance, pending invoices, email communication and much more.
2. Set clear expectations
Remember to mention your payment terms and late fees clearly on the estimate or on the invoice. Add a discount factor for the payment that has been made early. Let’s say, if the payment is due in 30 days, offer a discount of 2% for the full amount that is paid within 10 days.
3. Invoice right away!
There’s no perfect day to send the invoice. Once the work is complete, send the invoice immediately. As the project is still fresh on your clients’ mind, chances are high that you will receive the payment on time.
4. Don’t be lax in your terms of payment
Be it a friend or your BFF (best friend forever), do not be lenient when it comes to the terms of payment. When you give the clients a leeway in regard to payment terms, it might appear that you are being nice (to yourself), but honestly, you are hurting your business.
5. Call when necessary
Be ‘proactive’ and give a call to your client to confirm the receipt of invoice. Sometimes clients can ‘miss’ the email. Also, calling can be a good way to establish and maintain a personal connection with your client.
6. Stick to the schedule
When the clients are overdue on payments, remember not to sound pushy or needy. Following up too quickly or without any pattern might appear as if you are running behind your client with a club. If you feel that manually tracking the invoices that are overdue and sending reminders are a pain, then try the automated payment reminders.
7. Be polite yet professional
Ensure all your communications are nothing but professional. One late payment incident shouldn’t be the reason you harangue the customer for eternity. Use ‘Please’ and ‘Thank You’.
8. Be flexible when accepting payments
Accept all modes of payment – cash, cheque or online payments. Some customers are finicky while making payments; give them all the options available. If you haven’t already, then start accepting online payments from your clients. Freelancers and business owners who use the payment gateways supported by Zoho Invoice claim that accepting online payment is quick and painless.
9. Down payments might help reduce heartburn
Not every business model requires this, but wherever possible, ask for a down payment upfront. Startups may cringe as this might turn off new clients, but hey, they wanted you to do the job because they liked what they saw. So ask for some amount upfront, if not for the full.
10. Know a lawyer… just in case
You might find this to be absolutely unnecessary, but it wouldn’t hurt to get a legal opinion on customers who turn defaulters rather than adding your name and amount to the world’s longest invoice.
Following up with your customers in a scheduled, process-driven manner will ensure the smooth flow of cash into your accounts without you actually having to sound like a broken record.
Have you had experience tackling late payments? Share them with us. We’d love to hear them.