Are you tired of chasing down unpaid invoices? Well, you’re not alone. According to a 2012 Wall Street Journal survey, 64 percent of small businesses had unpaid invoices more than 60 days old, while 20 percent say the problem is getting worse.
Even though you don’t have control over late-payers, you do have control over how you set your policies, send out yours invoices and collect payments. “Fixing” some of thee internal processes and communications may help you get the cash flowing “into” your business a lot faster.
Make the terms clear
When you send a proposal, letter of engagement or contract for clients to sign off on, this is the time to clearly outline your payment policies. In the “terms” section, for example, stipulate that all invoices are due within 30 days. Skip the “net 30” text and keep the language of your contracts and invoices as simple as possible. Putting “due on receipt” on your invoices might SEEM like it would put a fire under your client, but in reality, without setting specific timeline, many are likely to see it as a free pass to pay whenever they get around to it. Be clear and set the expectation, such as “Payment due in 14 days.”
Bill on time!
It’s amazing how many small business owners drag their feet on invoicing. You would think that getting paid (fast) would be the first thing on their minds and yet the reason some small biz owners are scrambling every month is because they don’t have the process down. Maybe it’s because they don’t have a simple system for invoicing, or maybe it’s because they aren’t sure how to convert their time tracking to invoices (which really makes invoicing easy, by the way). Whatever the reasons, late invoicing leads to late payment. Get on top of your invoices and send them out at regular intervals for monthly projects (like the 5th of the month, for example). If you make it a habit to bill on time, clients will pay you on time.
Follow up with your clients regularly.
Your job isn’t done once you send out the invoice. You need to keep track of which invoices are overdue and send regular reminders. Here’s where a lot of small business owners drop the ball. If you’re looking for an invoicing system, make sure it reminds you when invoices are overdue so you can easily reach out when you need to. Don’t worry about being pushy! Big businesses follow procedures just like this to make sure they get paid.
Just because you’re a small business doesn’t mean you have to take the short end of the stick. Get your policies and systems in order and get paid on time.
About the author:
Lawton Ursrey – Sage One awareness guru and fellow entrepreneur
I have a healthy disrespect for the impossible and a passion for the little details. While I run my own small business, I am also passionate about helping other small business owners. If I’m not running my business, or helping you run yours, then I’m probably playing guitar.