The idea for my blog “tips to getting customers to pay” came to me after reading narrative on a software site. The article stated “that asking customers for money and invoicing them accordingly was the best part of a small business owner’s job”
Really? I was cast back to the early months of starting up my own business where I had to get to grips with a mountain of new paperwork and a never-ending list of things-to-do involving new skill areas.
Somehow, I scraped by but the one task that didn’t sit easily was actually invoicing my first clients.
This was, despite the fact that I had delivered a great service and that the clients in question were well seasoned small business owners, used to paying for services.
I just hated asking for money.
At the time I thought, perhaps it was just me but later came to realise that there were plenty of other solo-preneurs out there who all felt the same way.
I started analysing the reasons and came to conclusions involving personality, levels of self-esteem, disorganisation but I guess the simplest reason I came up with was that most small business owners had never before had to ask for payment.
If previously employed, payment was a done deal as soon as you signed your contract. Your only involvement with money was actually spending it. The whole process was easy and stress free!
Well as we all know, being your own boss is not straightforward and it certainly is not stress free!
But, my guess is that having set up your own business you’ve got guts and determination and asking for payment is just another task that you will begin to ease into and start feeling more comfortable about as time goes by.
The harsh reality is that if we don’t get slick about invoicing customers our small businesses would simply not survive!
Here are my TIPS to make the process more efficient and stress free.
1. Confirm your payment procedures early on
Outline early on in your discussions with a customer HOW and WHEN they are due to pay and of course HOW MUCH. Every small business owner has their own methodology and a client, used to paying one way in the same industry may just assume all holistic practitioners or all marketing consultants follow similar procedures. This doesn’t happen in practice so make it clear from the outset.
If you’re providing a service you may consider asking for a deposit, request part-payment through your work or simply bill on completion. Whatever you decide on doing, communicate the details early on.
2. Make it as easy as possible for your customer to pay you
If you’re on the move, use a mobile payment system such as izettle
If you’re emailing a PDF invoice and requesting direct bank transfer include sort code and bank account number and don’t forget a reference.
One of the fastest ways to receive payment is via online invoicing where you can offer the customer the option to pay electronically e.g. using pay-pal. If customers are given access to a payment link on an invoice, they are more likely to instantly make a payment
3. Include payment terms on your invoice
This really does speed things up and it’s remarkable how many small businesses fail to put any payment terms at all on their invoices. You may not be paid exactly to your stated payment terms but you will certainly be paid faster by stating terms of payment clearly on your invoice.
Don’t put “due on receipt” as this gives the customer opportunity to prevaricate over dates of receipt.
Include a line “payment due within” and then the number of days e.g. payment due within 7 days. This is easy understandable language and the customer can immediately identify with the time-frame
4. Be organised – prepare and Invoice promptly
With a good accounting software package, you can produce and send a very professional looking invoice in no time at all but whichever method you adopt, invoice as soon as possible after completion of your work or if you have negotiated other time frames make sure you stick to these. If you are slack with your timing in producing the invoice, the customer’s likely reaction will be to delay making prompt payment as they have no reason to sense any urgency.
5. Offer an incentive for customers to pay early
The offer of an early settlement discount ranging from 1 to 10% if payment is received within an early time-frame can encourage earlier payment. Even the smallest percentage discount can be enough to speed up the payment process.
Ensure that the details are clearly written on the invoice so that the offer has the intended effect of immediately motivating the customer to react.
Do check that you can afford to offer a discount.
6. Make sure your invoice is clear and relevant
Producing invoices using accounting software is relatively easy and less error prone than other methods but if you are producing invoices manually –
double check that you have dated, added the clear and relevant details of services provided, added up the itemised costs correctly and put all the correct payment details at the bottom. If the customer has to email or phone you to confirm or query any of the detail, you lose valuable time before payment is actually made
7. Chase up all late payments
This is another task that can seem intimidating and awkward – as you may have close relationships with your customers. You may feel uncomfortable about having to chase up but the chances are your customer will probably feel more embarrassed to have overlooked paying you in the first place.
The best way to ask for money that you are owed is to politely and professionally ask!
Chasing up on late payers by phone or email should be part of your weekly book-keeping procedures. If you operate a “manual” system, make sure that all paid invoices are filed in a different section. Chase all other invoices and annotate the action taken on the copy invoice.
If you are using accounting software your outstanding invoices will be listed in a report by customer and aged accordingly.
Stick to the above advice and you’ll be well on your way to overcoming any potential cash-flow issues in your small business.
Keen to find out more…….
If you’re new to being your own boss and want to find out more about invoicing and the systems you should adopt to record your income (and expenses) join me on my next workshop @ the Workstead, Kingsworthy on 30th June. Click here for more details.
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How have you coped with getting customers to pay?
What’s your track record in managing prompt invoicing? How have you made it easy for your customers to pay you? How do you feel about asking for payment? Have you got any other suggestions as to how to manage the process? Leave a comment below. I would love to hear your story.