5 Ways To Get Paid Quicker

In service businesses where work is invoiced, rather than paid for up front, it can be hard to get paid. Too often you work very hard to meet a customer deadline only for the customer to then drag their heels on paying their bills.

Every day that a payment is delayed damages your cashflow and constricts your business. You need to take control of the process and be in charge of when you get paid.

1. Agree a Payment Plan Before you Start Work
Customers will use any ambiguity to invent a reason not to pay you. The objective here is to explicitly and clearly agree, before any work begins, when you will get paid. This needs to be done in writing and signed by the customer.

Typically this is done on an ‘Order Form’ or ‘Terms & Conditions’ sheet. In this document you can outline the work to be completed and the payment schedule. Get them to physically sign it, don’t just accept an email saying ‘yeah, that’s OK’, you need them to understand that they are entering into a formal agreement to pay.

If your customer operates a Purchase Order (PO) number system make sure you get a valid PO number from them before starting. In larger companies, this is essential for getting paid.

2. Get Paid in Stages
It’s also important to get paid in stages as the work is completed, don’t allow the whole amount to remain outstanding until the work is fully complete. You need to avoid giving the customer the ‘I’ll pay you as soon as you finish one last thing’ excuse. By the time your work reaches this finishing stage you should have been paid for at least 75% of it.

If you haven’t done business with them before get enough to cover your costs up front. This is a reasonably normal practice so don’t think your customer will get offended by being asked for cash up-front. If they do take offence then maybe it’s an early warning sign of trouble to come.

3. Send Invoices Immediately
Very often businesses process their invoices at the end of every month, which often becomes the start of the following month.

You should create and send your invoices as soon as you possibly can. If the work is completed early in the month then don’t wait, send it immediately. After it’s sent put in a call drawing their attention to it and get them to confirm that they have received it and that everything is in order. If there is a problem fix it immediately.

In larger companies supplier invoices will need to be signed-off by several layers of management before they can be paid. The quicker you get into this process then the quicker you will get into their list of payments to be made.

4. Send Statements/Reminders
Sometimes customers genuinely forget to pay. People are busy and often they only deal with the tasks that are causing them the most distraction. Make sure that your customer knows about your invoice. Call before it is due to check that it is scheduled to be paid, don’t wait until after the payment date has been missed to make the call.

Send a statement every week if payments are overdue. Don’t give them the excuse that they never got the invoice or that they lost it. Using Yendo Accounts you can easily generate and send customer statements by email.

You need to give your customer a little breathing space to make a payment but as payments become overdue by more than a week or two it’s time to start making a nuisance of yourself.

When payments are overdue, call every second day. This may seem like a lot but they will become tired of this and will pay just to get rid of you. If this isn’t getting a response, call to their office and ask for a cheque. It may seem a little bit rude but so is not paying you.

5. If Necessary, Agree a Payment Plan
If your customer cannot pay then be realistic and quickly agree a payment plan. Meet them face to face and have an open and honest discussion about the situation. If they are genuinely struggling to pay then there is no point threatening them with legal action or other escalation.

Try to split it up into monthly amounts they can afford. The key thing is to get something from them, however small,  never accept nothing. Once you have agreed a payment plan, keep in regular contact and regularly remind your customer about the schedule.