How To Encourage Your Clients to Pay on Time
You work hard to deliver exceptional service to your clients. You burn the midnight oil to complete their projects before the deadline. Obviously, you expect to be paid on time. For freelancers and small business owners, the biggest disappointment is when their clients fail to send the payment on time.
Staying silent, hoping for the mail to miraculously arrive in your inbox will not solve the problem. That said, you are not supposed to pester them with numerous calls or emails either because that strategy may annoy your clients. There are better ways to get your clients to pay their invoice on time.
Here are some proven tactics to transform overdue invoices into payments.
1. USE POSITIVE REINFORCEMENT
One way of encouraging your clients to pay the invoice on time is to offer them some incentives like discounts. Make sure that your discounts won’t have too strong an impact on your bottom line. That said, your incentives should still be should still be tangible enough to excite your clients.
2. FEEL FREE TO USE NEGATIVE REINFORCEMENT AS WELL
Some clients respond well to positive reinforcement like discounts. Others are more likely to respond to negative reinforcement like penalties. A late payment penalty will encourage many clients to pay their invoice on time. When you impose a late payment penalty, the message is clear – you want your clients to pay on time. Keep in mind that you should not charge a large fine. If you do so, you may lose your clients.
3. AUTOMATE YOUR INVOICING
It is time you stopped sending paper invoices. They take longer to reach your client. They may also get lost in transit. Instead, use an automated invoicing process. You should also give your clients an opportunity to pay online. There is yet another advantage to using an automated billing process. It will continue to send payment reminders until the client pays up. Also, some automated invoicing systems allow your clients to see your payment rates and the projects you have completed. They too will appreciate this data because it helps them to manage their finances better.
4. USE RECURRING BILLING
If you are busy you may forget to send the invoice on time. And when you send it at a later date, the client may get confused by the different billing dates. This may affect your chances of getting paid. If you use a recurring billing system, you can rest assured that you will receive the payment on time. Since the client’s payment details are stored in the system, your invoice will be paid every time it is due.
5. GET YOUR PAYMENT TERMS AND CONDITIONS IN WRITING
The right time to do this is when you start to work with a new client or renew a contract. Clearly explain your invoice payment requirements and payment options. This will eliminate any misunderstandings.
6. NURTURE YOUR RELATIONSHIP WITH THE CLIENT
If you make a sincere effort to build a relationship with your client you are more likely to be paid on time. When the client learns more about your business model, they will also understand your need to be paid on time. And when you know more about them and their business, you will also be able to offer payment options that are convenient to them. This mutual understanding will build trust and improve your chances of getting timely payments.
7. ASK THEM TO PAY UPFRONT
This is a trust-building tactic that you can experiment with new clients. Once you have established a good business relationship with a client, you will probably not want to try this method. Some clients may refuse to pay the total amount in advance. In that case, you should at least ask for a partial payment.
Before you start working with new clients, you need to ensure that your payment arrangements are acceptable to both you and them. Once you have an agreement in place, that is probably all that you need to keep your clients on pace with their payments.
8. MAKE IT CONVENIENT FOR THEM TO PAY
Ask your clients what payment type and time is most convenient for them. This shows that you are flexible. This also improves your chances of receiving the payment on time.
10. FOLLOW UP
There is absolutely nothing wrong with calling and asking about the status of your payment. You should use this tactic with clients who are always late with their payments. Over time, they will get bored of repeated emails and calls. This might also encourage them to pay up.
11. HOLD WORK HOSTAGE
This probably is not the best tactic you can use, but it works in most cases. If you do not deliver the finished project on time because you have not received the payment it might lead to conflict. But by holding work hostage, you are also sending out the strong message that you cannot be taken for granted.
Some clients just want to test the waters. They want to see how you will react if they don’t pay on time. But when you refuse to deliver the project until the payment arrives, they will get the signal. So, use this tactic if nothing else works. After all, when you get into a business contract with a client, both of you are supposed to abide by its terms. You are required to complete the project on time, and they are required to send the payment upon delivery.
12. INVOICE EVERY TWO WEEKS
Encourage your clients to pay weekly or bimonthly. If you are getting paid on a weekly basis, they will not have to come up with a huge amount every time they press the payment button. This may help clients facing cash flow issues. This arrangement will also improve your cash flow.