Not receiving payment as promptly as you’d like might be the most frustrating part of managing your freelancer finances. Especially in the small business world, the success of your self-employed venture hinges solely on not just getting paid, but getting paid on time. Silently checking your inbox or mailbox each day doesn’t cut it, but neither will bugging your clients 24/7. Get things in order by giving your invoicing process an overhaul.
First, take a good, hard look at your current invoicing process and see if there are any obvious ways you can improve. For example, if you’re inconsistent about when you send out invoices, it can send the message that you’re fine with customers being inconsistent with when they send payment back.
Look into how your customers usually receive invoices, how they generally remit payment back to you, and the average length of time it takes to collect payments.
Look for Patterns
Throughout this process, look for patterns. Is there a connection between the amount of time you’ve been working with a client and how frequently or infrequently their payments are on time? Are invoices that are sent out weekly more likely to be received on time than invoices sent out monthly?
In addition to evaluating the platforms you use and timetables you abide by, consider reviewing your communication with clients. Are you lackadaisical, passive-aggressive or overly forgiving when discussing payment schedules?
Track to Act
Create a customer database to track payments and client behaviors. This will help you act accordingly. If you find that one account has sent late payments for the past six months, it may be time to contact them and re-establish payment terms or discuss a late payment penalty policy. On the other hand, if you find that another account has sent payments on time for the past year, you might send them a thank you note or offer a discount on their next invoice to show your appreciation.
Organize and Automate
Use an online invoice generator, if you aren’t already doing so, to streamline the look of and information in each of your invoices. This will help clients know exactly how much you’re charging them for each product or service, and they’ll know what to expect and look for with each invoice. You’ll eliminate any possibility of a delay because of ambiguity. Then, automate what you can — whether that’s setting up recurring billing with your long-term clients or using a tool like Boomerang that will send scheduled invoice reminder emails to clients.
Use Positive (or Negative) Reinforcement
As an incentive, consider offering a reward or discount to customers who not only pay on time but pay early. Make sure the reward is high enough to make it worth it to pay early, but reasonable enough to not affect your bottom line. In addition, consider penalizing those who are consistently late with an appropriate finance charge. Doing so will relay the message that you expect to be paid on time; just make sure the amount is reasonable enough to encourage them to be on time in the future without the risk of losing them as a client.
Offer Convenient Payment Options
Accepting only cash, check or credit won’t cut it anymore. Consider accepting various other methods of payment, including platforms and digital wallets like PayPal, Google Wallet, Apple Pay and even Bitcoin. Doing so shows your flexibility, and also makes it easier for customers to use whatever they’re already comfortable with. No matter how you collect payment, be diligent and transparent about data security so your clients won’t hesitate to pay.
Triple Check Before Sending
An obvious but essential way to make it easier for customers to pay you on time is to triple check your invoices for accuracy before sending them out. Don’t let a simple typo or numerical error cause you a two-week delay on getting paid.