Cash flow is very important for small businesses and freelancers. When you first started your freelance design career, you probably didn’t expect to spend so much time chasing down clients to pay their invoices. You started it to do what you love and get paid for it. There are 8 tips that you can implement into your business immediately to help you get paid sooner.
1. Deal with prospect from day one
Frequently, freelance designers are so excited to win new business that they rush through a new deal without a contract. Don’t be afraid to give your client a contract, they wait for it and you’ll evade many future misunderstandings and due invoices. It’s also best to take the time to walk your new client through all the key deliverables and payment dates at the start of a new project. To remind them about your late payment polices is also good. This should be included in your contract if you have them.
2. Make a powerful client relationship
To build a strong client relationship you have to constant communication with them. Update them on what you’re doing and how things are going. Get them to feel part of the project. This also ensures that you both have a thorough understanding of the work being done.
3. Find the person that pays you
If your client is a small business, chances are the business owner is the person that processes payments. If your client is a mid or large sized company then it might be their accounting department or financial controller. At the start of a new project, you have the name, phone number, and email of the person who will be processing your bills. In fact, ask for an email introduction if necessary.
4. Don’t underestimate your invoice tenures
All invoices have payment terms listed on the invoice. You might be surprised just how much they can determine how fast you get paid. In fact, the Market Intelligence team at FreshBooks studied its users’ payment terms in order to find the best invoice terms to get you paid faster. Here is an example of properly worded invoice terms according to the study:
“Thank you; we really appreciate your business. Please send payment within 21 days of receiving this invoice.”
5. Invoice earlier
This is simple, but frequently overlooked. The sooner you invoice your clients the sooner they pay you. This simply means that each time you are due a payment bring a paper invoice with you or email them one. In almost all companies, they cannot pay you until they have a copy of your invoice for their own records. So if they have your invoice, they can start the process to pay you.
6. Should be clear with your report of work
You should be clear and specific on your invoice. Do not use any industry jargon in your product or service description on your invoice. If your client does not fully understand what they are being billed for, then they are less likely to sign-off on the invoice.
All invoices would be paid within minutes. The truth of the matter is that invoices can typically take anywhere from three to twelve weeks to get paid, and that can be a very long wait for a small business. This is why every freelancer needs to have a follow-up strategy for invoices. Sometimes a quick email reminder can do the trick, but don’t be afraid to give them a call if your emails go unanswered. When it comes to calling, you’ll want to know your client’s schedule. This will make it much easier to reach them instead of playing phone tag.
8. Letters and legal
Small claims court is always a selection when things are going really bad, but it’s likely not worth your time and expense to collect on small amounts. It’s best to try as hard as you can with formal letters. If this fails, consult a lawyer to first get advice, and then have them send out a letter on your behalf.
The letter should state that you have exhausted all other avenues and that if you do not receive payment within a set amount of time, you will have no other recourse but to take the matter to court. This is often enough to secure your payment, and is a much more cost effective method than taking the client to court.