get paidOne of the hardest things for many self employed individuals is chasing money owed. You work so hard to build a rapport with the client, nurture the relationship and then bam – awkward territory. When a client doesn’t pay on time there are a few ways it can impact you:

  1. Cash flow
  2. Cost of time chasing
  3. Feeling unappreciated = a blow to the confidence
  4. Negative impact on the business:client relationship

So what can you do to reduce the impact of late and non-payers? Obviously the answer is to GET PAID!

Here are my top tips for getting paid by clients in a timely manner:

  1. Upfront payments
    Obviously upfront payments cost you less in administration, ensure that the job is paid for, and improves your cashflow. When you insist on upfront payments you do need to remember to nurture the relationship and don’t focus on it being based around mistrust. Having simple, clear processes for upfront payments can make this easy and non-confronting for clients. Upfront payments work well for projects and retainers. If your client has adhoc tasks on a regular basis and you won’t start until you’ve received the outline, quoted and then received payment, this can hold things up. So look at ways of streamlining your systems so it’s easy for clients to delegate work to you.
  2. Agreements
    An agreement should outline exactly what the payment terms are, all expectations and contingencies. Without an agreement in place things can become very uncomfortable very quickly as you resort to “he said/she said” evidence. Your agreement should support both parties and ensure that the process is streamlined and efficient.
  3. Cease work
    Your agreement should also state that when an account becomes overdue further work will be put on hold until the account is up to date. A client with important work that needs to be done will usually respond very quickly to this action. Threatening to stop work when it is not clearly outlined (and preferably verbally stated) prior to commencing work can impact the relationship. So make sure that you are always clear and friendly about the terms so clients know exactly how it all works.
  4. A Credit Agreement
    A proper credit agreement will include referees from the clients other suppliers and check for any bad debt history. The credit agreement will still state due dates, liabilities and the steps which will be taken should the account be outstanding.
  5. Utilise a bookkeeper and/or Debt Collector
    Asking for money from clients can sometimes feel like the uncomfortable part of an otherwise great relationship. So outsourcing this component – from invoicing to “chasing” – can separate you from the process and formalise the process somewhat. This method is often perceived as more ‘professional’ and an otherwise “casual payer” may take more notice and action if they are dealing with someone else.

If you want more tips and guidance on collecting payments, I recommend you check out the Collect More app created by Paul Metcalf. You can download it from itunes here.

You can also download some great billing templates here.