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Every business owner has gone through the trouble of getting a customer or client to finally pay an invoice. Besides taxes, collections has to be one of the most irritating aspects of owning a business. Whether or not it’s the truth, it always feels like they’re avoiding paying you on purpose.
The reality, though, is that sometimes your customers and clients simply make mistakes. The invoice falls through the cracks for a variety of reasons and suddenly it’s way past due time to pay it. Of course this doesn’t help you at all, though, since you don’t have the money you need to pay bills and feed your family.
So why does this happen, and more importantly, how can you prevent it?
Let’s face it: every time a customer or client says they can’t pay or they “forgot,” it’s just an excuse. They had an obligation and they neglected to fulfill it. So we’re not trying to justify any behavior here – but it helps to know why these things happen so you can’t prevent them from repeating.
For example, think of the last time you were on a hot streak with your business or were otherwise swamped with work. How pressing did paying bills seem? Likely not very, as you had ten thousand other things to handle – you just kept telling yourself you’d do it later.
Another pretty common excuse from clients is they don’t feel “connected” to the transaction. This can be worse for really small businesses or freelancers as some feel they’re not “legit” enough to take seriously. Naturally this is unfair, but it means some invoices get pushed back because “they can wait, they’re not a real business.”
One last common excuse is all about payment options – if you don’t have the specific one they like, they’re less likely to pay on time. For example, if you accept checks and credit cards but no PayPal, they might push your invoice to the side until they have the time to buy new printer ink, fire up their old check writing program, buy stamps, etc. You get the point.
Keeping these excuses in mind, let’s figure out how to prevent them from ever coming up. The last one, payment options, is the easiest to fix. It really is a great idea to have as many options available to your clients and customers as possible. After all, it can actually open you up to even more sales, so it’s just a good business practice in general.
The others are a little more complicated. Not letting your clients miss a payment date involves keeping your business in their mind, no matter how busy they are. One way is to make sure to follow up, even before the due date comes for their invoice.
Following up doesn’t just mean bothering them about money, though. Try asking them if everything came out with the product or project and if there’s anything else you can do. Or simply interact with them on social media so they know you won’t just disappear when money is due.
As for feeling “connected” to the transaction, it’s important to treat your business as such…a legit business. The more seriously you take everything the more likely the client will, too. The first thing to start doing is demand a contract with every single job and, if needed, a down payment, especially if you’re not sure they’ll pay on time.
In the contract, be sure you get all the details down, including when you turn in the project and when they turn in the dough. If you don’t, a misunderstanding will come up which could delay payment. Be absolutely sure you follow your own rules and dates, too – the more punctual and professional they are, the better your chances of having a happy pay day.
Following up on unpaid bills is frustrating, and it isn’t the easiest conversation to have. But you have to remember – you can’t (and shouldn’t) work for free. You provided a product or service to your customer and they have an obligation to pay for it. If you have continual offenders of non-payment, it might be time to let them go – to open the door for more clients who will pay you on time (and respect you for the work your do).