As a business, you rely on clients to pay you in order to pay for all the expenses associated with keeping your operations going. So when clients pay you late, it puts you in an awkward position. You might rely on timely payments to pay your own staff, or to cover the expenses you paid to complete a project. Whatever the case, you deserve to get paid once you’ve completed your work.
Unfortunately, you only have so much control over whether or not clients pay you on time. Some simply forget to pay, others will ghost you because they simply can’t afford to pay your invoice at the moment. But don’t worry, you’re not completely out of luck.
If you’re currently looking at a long list of past due invoices from your clients, here are some tips to get clients to pay you faster!
1. Automate Your Invoices
This tip is for clients that pay you monthly. For instance, if you have a monthly retainer that’s the same amount each month. Automating the invoice prevents you from forgetting to send a new invoice each month, and ensures that you’re sending them in a timely manner each month.
2. Invoice Right Away
On the same token, make sure you’re not waiting days or weeks to send your invoices. The longer you wait to send your invoices, the longer it’s going to take you to get paid.
As soon as you’ve completed the work or delivered your product, and the client approves, send off the invoice. As simple as it sounds, this is one of the quickest ways to get clients to pay you faster, yet so many businesses don’t do it.
3. Request a Deposit
If the reason you want to get paid faster is to help with your cash flow, then requesting a deposit (or even upfront payment) is a good option. Deposits are particularly helpful for service-based businesses that require work to be contracted out for the client’s project.
For instance, construction companies often contract parts of their projects to third party companies or day laborers. In that scenario, you can pay the workers with the money from the deposit in order to complete the project without coming out of pocket to pay your workers.
Anywhere from a 10-50% deposit is the norm. However, keep in mind that some clients won’t be open to this, so it could cause you some business if a deposit is a requirement.
4. Discuss Payment Terms Upfront
If you’re clear about when payments are expected from the get-go, you’ll improve your chances of getting paid on time. When you’re vague about when you expect to be paid or worse, don’t discuss it at a, you leave a lot of room for interpretation and assumptions.
Trust us, if you’re not clear about the payment terms early on, the client isn’t going to press the subject.
Set the payment terms in your contract/agreement. Then, make sure the payment terms are also clearly stated on your invoices.
5. Don’t be Overly Aggressive
While you do need to be clear and upfront about when you expect payment, you shouldn’t be super demanding, particularly if a client is only a day late or if it’s a new client. Leaving notes on invoices like “Payment needs to be made in a timely manner” is unnecessarily aggressive and turns clients off.
Instead, a simple note like “Thanks for choosing us! If you’re satisfied with our work, we’d appreciate your timely payment” express your gratitude for their business, while politely making them aware that you’d like for them to pay you as early as possible.
6. Provide an Early Payment Discount
Nothing will get clients paying you faster quite like saving them money. Think of it this way. If you have two bills to pay, and one of them offers you a 3% discount for paying it before the due date, which one are you going to pay first?
Never fail to remember that you’re not the only company invoicing your client. They likely have several providers that they work with, all sending invoices around the same time. If you want to jump to the top of the list, let them know that you offer a discount for early payments.
The discount amount doesn’t even have to be that large. Fiver percent or lower is typically pretty standard.
7. Send Payment Reminders
Once a payment is past due, do you just sit and wait for the client to get around to it? If so, that’s probably the reason you’re not getting paid as quickly as you’d like. Like we mentioned, some clients don’t pay on time simply because they forget. Sending reminders keeps you top of mind.
This might seem like a time-suck to have to send out all these emails. But don’t worry, you can automate it! With invoicing software like invoicely, you can send regular reminders to your clients to pay an invoice until the payment is received.
8. Offer Multiple Payment Options
The easier you make it for clients to pay you, the quicker you’ll get paid. If you make clients jump through hoops and require them to sign up for a new service in order to pay you, you’re creating friction in the payment process.
One of the best options is to offer PayPal payments. That way, all your clients need is a credit card to pay online. Even if they don’t have a PayPal account, they can still pay you.
9. Have a Late Payment Penalty
Just like giving a a discount for early payments will motivate clients to pay quickly, telling them they’ll have to pay a fee if they’re late will send across just as strong of a message. Nobody likes to pay fees (just ask cell phone and credit card companies).
After receiving a late penalty fee once, most clients won’t make the same mistake twice, so it works as a preventive measure.
The reason most people get upset about having to pay late fees is because it usually ends up coming as a surprise. So you need to make it crystal clear from the beginning that you charge a late fee, how much the fee is and when it takes effect.
And don’t hide it away in the fine print. Point it out during the initial discussions, and verbalize it. So in the event that they pay late and you need to charge them a fee, it won’t be a surprise.
10. Establish Great Client Relationships
Think about your friends and business network. You can probably think of at least a couple people that you along with extremely well and have always done right by you. So if you promised to do something for them, you’d make it a priority to keep your word, right?
Well, the same thing holds true for invoicing clients. The stronger rapport you have with clients, the more likely they’ll be to pay you quickly. And that all comes from building great relationships with your clients.
Not only will this get you paid quicker, but in the event that an issue ever does arise about your payments, it’ll be easier for you to come to an agreement. Whether that’s working out a payment plan or coming up with an alternative solution, when your clients have a strong relationship with you they’ll do whatever they can to make good on their invoice.
11. Borrow From the SaaS Industry
One of the most popular trends in the SaaS industry is to provide discounts for customers that pay for 3, 6 or 12 months upfront. If you provide a service that’s ongoing monthly, why not offer a similar payment option?
Rather than accept monthly payments, offer a slight discount for clients that are willing to pay you quarterly, bi-annually or even annually. The concept might seem odd at first, but it’s becoming more common in service-based businesses. Agencies have been doing a variation of this for decades, by requiring clients to sign long-term contracts.
However, this approach is slightly different because clients aren’t required to get tied down to a long-term contract. They’re incentivized to pay for multiple months upfront in order take advantage of the cost savings. This approach works particularly well for your existing clients.
For instance, say a long-time client has been paying you $500 a month, and is sometimes late on their payments because they’re simply forgetful or just don’t prioritize it. Now, what if you offered them a 6-month deal for $2600. They’ll save $400, and you’ll have extra cashflow in the bank without having to worry about collecting payments each month. Plus it guarantees that they’ll stay a client for at least an extra six months!
12. Don’t Allow Patterns to Form
If you allow clients to pay you late on a constant basis, it’ll become a habit. In addition to charging late fees, you need to reaffirm with the client that you expect payments to be made on time. Establish this early on to prevent them from making it a habit.
One of the best ways to do this is to cut off services until you’re paid. If you offer an ongoing service like advertising, legal services or anything else, let them know that you will not continue to do any work until their current balance is paid in full. If they value your services, they’ll rectify the payments ASAP.
Start Getting Paid Faster
You work hard to keep your clients happy. It’s only fair that you get compensated in a timely manner. Use these 12 tips to make sure you get paid on time, every time.