How to make sure you’re paid on time


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Guest Post, Money

Some freelancers struggle to reconcile the two different relationships of selling to clients and asking to be paid – it’s a dilemma that’s commonplace, and if you feel this way you’re not alone. It’s often felt that asking to be paid and chasing your payment will cause customers to go elsewhere.

Here are some tips that will help you manage these (possibly) opposing relationships with customers, and will give you a simple that will make it easier to ask for your money, and actually get it into your bank account!

Remember that getting paid begins with the sales process. Agree payment terms as part of the sale (not afterwards), and make sure you send terms and conditions before you start work. Ask your customer how they prefer you to submit invoices, who you send them to, email or snail mail, quote a purchase order number, etc. etc.

Make it a routine in your company to call customers and ask to be paid – not just something that happens when you think of it, or you’ve hit your overdraft limit and can’t pay anyone! Better still, put aside a set time every week to chase payments.

Approach credit control as a customer service activity, not an “anti-customer” activity. Calling to check that an invoice is safely received by your customer a week after you’ve sent it out increases your chances of getting paid dramatically! Plus, it’s nicer than calling and berating them for not paying you once it’s overdue.

Phone customers, don’t just email. When you telephone you’re in control of the conversation – it’s just too easy to get fobbed off if you only email, and it isn’t efficient (you may think it is, but our statistics show its at least 42% less efficient).

Send your invoices out promptly, don’t wait until the end of the month and send gentle reminders and statements to customers fortnightly – many companies don’t pay until they get a statement or a phone call – make sure your payment is prioritised.

Make sure you get the right answer to the right question – which is “when will the money be in my bank account” – it isn’t “when are you writing the cheque?”

Is there another way you can get paid? Many firms offer alternatives, like direct debit or credit cards.

Have an escalation process for people who still don’t pay their invoice.

Don’t be afraid of issuing that 7 day letter and following through on it. Remember – people who don’t pay you are NOT customers.

Photo by Kate Ter Haar

  • http://onemanbandaccounting.co.uk/ Rosie Slosek

    Really solid practical advice here. A system for getting paid is one of the first things you need in place as a business.

    I’d add that a lot depends on who your clients are: I help one man bands, and they usually have micro businesses as customers which need a different approach to big businesses.

    I send all my invoices by email as then I have a record and follow up by email. Since my clients are buying accountancy help and services, I am persistent but gentle and firm. I’ll only phone to chase when the client is behind on payment. Other businesses I know go to the phone first. It depends on your clients and what works best.

  • http://www.facebook.com/apedro77 Andreia Pedro

    I don’t think late payments are a “one man” business problem.
    There have always been late payers (some because if we don’t remind them they truly forget, especially if they are essentially freelancers outsourcers; others, in more malicious intents, for banking strategic purposes). But never in 8 years of freelancing have I seen it so often and so common excuses for late payment: “system break down” or “our Finance Dept.” – if there is one – “is unable to process payment”… Even big companies can fail payment on time, which is ridiculous, more even if they have a payment system in place! In this case, it doesn’t yet mean they’re not going to pay, I suspect they’re just trying to gain time/money delaying the payment process. I would risk to actually say they sometimes just put it “on hold” for a couple of days. I wish I could put all my bills “on hold” too. But the truth is, more and more, this is becoming an ordinary practice, and there’s no such thing as a “freelancer support” in place to allow us to keep going. I’m already starting to feel like I am paying to work, instead of getting any returns from my “investment”…

  • http://twitter.com/JordanPoulton Jordan Poulton

    We’re a startup tackling this problem… Please help us out by filling in our questionnaire. We chase payments so you don’t have to : http://jordanpoulton.wufoo.com/forms/m7x3p9/

  • http://twitter.com/NathanielChima .Nathaniel.

    This is really useful, thank you very much. I agree with @1ManBandAccts:disqus gentle and firm is the way to go because in my experience some clients/ companies genuinely forget or leave it a little late