In my experience obtaining clients and customers and getting paid are the top challenges for businesses. These problems are more critical for business owners who work alone and in small offices because it takes manpower and billing systems to obtain customers and get paid.
There can be a connection between getting paid and attracting new customers. Customers who feel you have worked with them regarding a billing plan that suits their needs will refer new customers to you.
Despite the influx of technology, getting paid is often difficult. It also requires you to be nice but professionally clear and firm about your payment expectations, and to implement billing methods that reinforce your payment agreement.
Unfortunately the weak economy has not helped. With many businesses and individuals still in debt, there are too many people owe too much money. In these trying times, you have to be realistic.
Accommodating to your customers’ payment abilities will improve your chances of getting paid.
Payment agreement:
- I suggest that you meet with a new customer and talk openly about the contract price and costs and how the client may be able to pay. It is crucial that you have a written agreement. If your agreement is complicated, I strongly suggest that you contact a lawyer (yes, my office drafts such agreements). In my practice, oral contracts are the leading cause of unwanted litigation.
Payment plans:
- Ideally, it would be best to get paid work up front. However, that is not always realistic. If your customer is unable to pay the full amount, I would suggest a payment plan.The most popular payment plan is the minimum monthly payment.
Billing cycle:
- I recommend calendar billing. It is simpler to discuss months like June, July or August rather than a date range. You don’t necessarily have to send out bills on the last day of the month. The key is to be consistent, billing on the same date each month. If you work in the professional services industry, professional services, the bill tells a history or should tell a history and the history is best demonstrated month by month.
Billing Regimen:
- It is crucial to bill regularly. Stick to a date certain and stick with it. If you A late billing for one month can destroy your cash flow for months.
Reminder Bills:
- It is vital that you inform your client immediately by email and/or mail when you have not received payment by the date the bill is due. It should be professional and the wording should relate to the amount that is past due. If you received partial payment, you should thank the client for the partial payment, however, you should request full payment and offer another payment plan.
Should you Email Invoices?
- Emailing bills is common for some businesses, but mailed bills get a higher rate of payment. Emailed bills are often looked over. get bypassed and disappear in the clutter of the email inbox.Emailed bills have much higher response rate if you have a link to a payment site.
Late Charges:
- A late charge is a charge for not paying on time. If you are planning on billing a late payment charge I suggest a flat amount not a percent so there is no confusion that you might be charging interest on an unpaid balance.In my experience, however, late payment charges are not the best way to encourage clients feel good about paying you, and although our company offers them I do not recommend them.
If all else fails, then your next step is to commence a lawsuit.
Feel free to contact my office regarding any specific questions about getting paid and whether a lawsuit is appropriate.
