Slow Paying Clients? 7 Tips to Help You Get Paid Faster

You delivered your product or services on time and your client was-as usual-thrilled with your work. But what gives? The due date on the invoice you sent is now several weeks past due, and it isn't the first time this has happened with this customer.

Slow paying clients. Ugh.

No matter what type of business you operate, you're bound to experience them. In fact, a survey released by PaySimple a few years ago found that 80% of small businesses struggle with receiving payments past their due dates. And a National Federation of Independent Business survey revealed that approximately 64% of the small businesses surveyed reported having clients who didn't pay invoices for at least 60 days.

Under most circumstances I think it makes sense to give customers the benefit of the doubt; most really are well-meaning people or companies who intend to, and usually do, pay you … eventually. Their habitual late payments, however, can hurt your cash flow. That's bad for the financial health of your business, so you're wise to take action to nip the problem of late payments in the bud and prevent new clients from becoming late payers.

Where do you begin? By using one or more of the following tactics, which can help motivate your clients to pay on time:

1. Choose the right payment terms. A Xero study found that, on average, customers pay two weeks late. So, Envato Tuts+ suggests that no matter which payment terms you choose, you should add two weeks to estimate the actual date when you'll receive payment. For example: If you want to get paid in 30 days, consider using payment terms of 13 days or less.


2. Choose your words carefully. According to a Freshbooks study, using phrasing like “payment due within 20 days” rather than “net 20” makes it easier for customers to identify the timeframe in which payment is due. And although “due upon receipt” may sound urgent, it gives your customers too much wiggle room.


3. Offer a small discount for paying early. A little positive reinforcement might help you get paid on time. Consider offering clients a discount of 1 or 2% if you receive their payment a certain number of days before the invoice due date.


4. Institute a late payment fee. Unfortunately, not all customers will be motivated at the prospect of saving money. They might pay up on time, however, if paying late comes at a cost. Even an amount as small as 1.5% might grab their attention and get that check in the mail.


5. Give the option to pay electronically online. By enabling clients to pay instantly through an online payment service like PayPal, you make it more convenient to pay. And it allows customers who are short on funds to pay using their credit cards. That way, you're not stuck waiting until they have money in the bank.


6. Send a gentle reminder when an invoice is a week past due. In many cases, invoices simply get lost in the shuffle. By politely following up with clients after invoices are a week past due, you can put them back on your customers' radar.


7. Do not do more work for the client if their account is 30 days past due. Tough. Love. Sometimes temporarily ceasing to provide services or products is the only way to get a client to understand paying you isn't optional.

While there's no guarantee any of these will in every case prevent late payments, they will work with some customers-and you'll have the peace of mind knowing you're doing what you can to alleviate the issue.

Regardless of how you decide to go about minimizing the problem of late payments, make sure you're upfront about your payment terms and conditions in your client agreements and on your invoices. Communicating clearly and allowing no room for misinterpretation gives you leverage when following up with clients who have run behind on paying.

I also encourage you to never, ever underestimate the power of maintaining harmonious professional relationships with your clients. Regardless of how frustrated you may be, keep your cool and remain respectful when checking on invoices that have gone overdue.

The post Slow Paying Clients? 7 Tips to Help You Get Paid Faster appeared first on AllBusiness.com

The post Slow Paying Clients? 7 Tips to Help You Get Paid Faster appeared first on AllBusiness.com.