Cash flow is one of the biggest challenges every small business owner faces. Even when business is good, your bank account balance may be telling a different story. So, if you have plenty of work and you’re keeping your expenses in check, why are you having trouble making payroll? One culprit could be the dreaded “check is in the mail” problem–to put it simply, you’re not getting paid fast enough.
Here are 6 tips to get paid faster:
Be In The Know
Always find out in advance how you are going to be paid and what’s needed in order to get paid. Often business owners are so eager to close the deal that they overlook the fine print about terms and processes.
If your client is a small business or organization, find out what paperwork their accountant needs from you before processing your payment. If you are dealing with a larger corporation or government client, you may need even more information, such as the department and individual to send your invoice to, the purchase order number, the mailing address, or how to submit your invoice properly through their online system.
Don’t wait until it’s time to send the invoice to get the details you need.
Send Invoices ASAP
This should go without saying, but the reality is many small business owners are so busy that they aren’t sending invoices in a timely manner. If you find yourself either forgetting to send an invoice or falling months behind in your invoicing, it’s time to put a more efficient process in place.
If you are billing monthly, send your invoices out on a set day each month or set up an automated invoicing system for retainers and monthly packages. If you are billing per project, send your invoices as soon the service is delivered.
Set Up a Reasonable Payment Schedule
When committing to large or long term projects, you can often negotiate a schedule that requires payments throughout the project, rather than waiting to send an invoice at the end. You may choose to set payment intervals along a timeline with monthly or periodic due dates, or you may want to consider billing the client when you meet certain goals or deliverables.
You have expenses to meet along the way to keep the project going, so it’s perfectly reasonable and common to expect payments throughout your engagement. Setting up your billing process accordingly will help you get paid faster.
Productize Your Service
Productizing a service means packaging a service with a defined scope and price. A productized service is delivered in a systemized manner and positioned as having a value-added advantage to the client.
When you productize a service, you’ll be spending less time during the sales and project planning process, which will free you up to spend more time marketing and delivering great service. You can onboard clients faster and get projects completed more efficiently, which means you can get paid more quickly, and even request full payment up front.
Going digital makes it easier for your clients to pay quickly. In most cases, there is no need to send a paper invoice by way of snail mail anymore. With just a few clicks, you can use a tool such as FreshBooks to send professional-looking invoices via email, and your client can pay you within minutes. FreshBooks and similar services will also deposit payments into your business bank account within days.
Depending on the type of business you have, you may want to consider other ways for your clients to pay you digitally. If you are meeting clients in person, why not use a card reader like Square to get paid with one swipe? You can also sell productized services and packages online using a PayPal link or shopping cart, such as SamCart.
For fast payment, digital is the way to go.
Don’t be afraid to follow up. If the client owes you money, there’s nothing wrong with politely reminding them you’re still waiting on the payment. Often, the invoice has been misplaced, forgotten, or something simple is holding it up. When you don’t check in, there’s a good chance you’ll be left waiting longer than necessary.
To take the awkwardness out of it, set up a follow-up process and stick with it consistently. Ideally, your digital payment system will have built-in features to automate reminders.
By putting these simple steps into practice, you’ll soon find yourself getting paid faster than ever before and putting your cash flow problems behind you.