7 Foolproof Strategies To Collect Payments On Time (Tools & Hacks)Written by Marya Sutimi on August 02, 2021
Small business owners and freelancers often struggle to collect payments on time from their clients and customers. The anxiety of not getting paid is not only frustrating mentally, but it also affects your business financially.
In order to avoid unpaid invoices or outstanding payments into your account, we will share some strategies and hacks to ensure that you can collect payments for your business on time.
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We will also outline some recommended tools that you can consider to support the operational activities in your business. So, without further ado, here are seven foolproof strategies to receive your payments on time!
1. Establishing An Upfront Payment Policy
Negotiating an upfront payment with your potential clients can be tricky, especially if you’re a new small business owner. However, establishing an upfront payment policy is beneficial from both the business and the client’s side.
As a business owner, you don’t have to deal with unpaid invoices in the future, so you will be less worried about completing the project. From the client’s perspective, paying upfront can also help them allocate their budget elsewhere.
One of the stellar hacks to show your client that you run a legitimate business is to create a contract that includes your business’s payment policy. Establishing a written agreement is an important part of setting expectations from clients and outlining your responsibility to ensure that you’ll get paid for your work.
Tools & Hacks To Create An Effective Client Contract
A good contract doesn’t have to be complex. It should be adequate to gain understanding between your client and you as a business owner. Having a contract in hand will help both parties to get on the same page about their rights and responsibility. It will protect your business, while it also does your client.
There are many platforms that you can use to establish a client contract. All-in-one platforms like Dubsado or Rocket Lawyer will help you set up an effective agreement with some ready-to-edit templates. Those platforms also enable your client to sign it digitally in no time.
If you already have your contract template ready, you can also consider some digital signature platforms such as PandaDoc or HelloSign and other Docusign Alternatives.
2. Consider a Retainer-Based Model
If you currently charge your client with an hourly rate, maybe it’s time to pivot and consider a retainer-based business model. The latter is most helpful if you know a steady workflow for the relevant project for your client.
Offering a retainer-based model for your business will enable you to focus more on helping your client achieve their goals through the deliverables. As a business owner, having this model will put you at ease in predicting your projectional income from time to time.
From the client’s point of view, choosing retainer suppliers or service providers can also help them adjust their budget accordingly.
Tools & Hacks When You Offer a Retainer-Based Model
Being paid continuously for your retainer-based business model can help you set almost everything in automation. From lead generation to your invoicing system, you can automate them to focus on high-quality work for your business.
To serve your retainer clients, you can set up a recurring invoice in automation using platforms like InvoiceBerry. Sending an invoice manually can be time-consuming, invoicing software will be a game-changer to collect payment on time.
Through InvoiceBerry, you can also set up an automatic email reminder if there’s an overdue invoice from your client’s side.
3. Offer A Personalized Payment Schedule
Being transparent about your business is one key to maintain a good relationship with your client. You could set up a policy to make sure that you get paid, but you should also be flexible in adjusting to your client’s needs if necessary.
Having open communication with your client about their preferred payment schedule or installment can be one way to prevent outstanding invoices in the future.
Clients are different, and some of them would find it easier to pay for your products or services through installments. If you can offer a collaborative option by giving them a personalized payment schedule, it may become one way to foster a strong relationship with your client that will always lead to payments on time!
Tools & Hacks When You Use A Personalized Payment Schedule For Different Clients
If you decide to offer a personalized payment schedule for your clients, don’t forget to turn on the reminder for each payment schedule to avoid outstanding invoices on your behalf.
InvoiceBerry comes with a recurring invoice feature that allows you to set up an invoicing schedule for each client accordingly.
You can easily create your client’s profile and set up the payment schedule based on the starting date of the project, the payment frequency, and the items listed for the client in the invoice.
Once everything is set, you can start automating the recurring invoice to be sent to the client directly in no time!
4. Automate Your Invoice And Billing System
One of the common mistakes for most freelancers and small business owners at the beginning of their business is invoicing mistake. From sending the invoice late, which caused the late payment from the client’s end, to incomplete details that need multiple revisions before getting paid.
Automating your invoice system will minimize human error to ensure that you can collect payments in a timely manner. It effectively decreases the chance of making unnecessary invoice blunders from your end. On top of that, most invoicing software also enables you to restore your transaction data.
Tools & Hacks To Automate Your Invoicing System
There are many benefits to set up your invoicing system in automation. It enables you to customize your invoice to make it look professional based on your branding style and colors, and it usually comes with additional features that can streamline your client invoicing experience.
InvoiceBerry helps you save your time and money by simplifying invoices and expense tracking. You can pick an invoice template and add your logo to personalize it before sending it to the clients. In addition to that, you can also add payment terms automatically in one go for all the invoices you’re going to send in the future.
If you need to set up automatic emails for your clients, InvoiceBerry also has an email preference feature that allows you to create various templates for your follow-up emails.
5. Maintain A Good Relationship With Your Client
Having a positive client relationship is essential when you run your business. Maintaining a good relationship with your client will not only open more opportunities to receive repeat orders from them, but it will also help you big time in the case of outstanding payments.
As a freelancer or a business owner, having open communication with your client is necessary to find out how you can improve the process for your future interactions.
When you have a good relationship with your client, you can discuss anything to achieve the goals from both sides, which includes the best way to collect payments on time.
Tools & Hacks To Maintain A Good Relationship With Your Client
Maintaining regular contact with your client is a necessity to retain the quality of your work and how you can improve it moving forward. It could also be your chance to deliver feedback to your clients.
Having a good relationship with your client is vital, but it’s also important to set boundaries with them accordingly. Choose a relevant platform to check in with each other before you start working together. Share your detailed business hours to make sure that they know when they should expect a response from you.
By outlining the matters at the beginning, you will prevent any possible misunderstanding that may come up about your communication method.
6. Create A Relevant Strategy For Payment Collections
Now that you already know which invoicing tool you can use for automation, it’s time to streamline your strategies to collect payments from each client on time.
What’s next after you send an invoice to the client? How many days do you have to wait until it’s time to send an email reminder for the outstanding invoices? Which step will you take when you have to deal with a client refusing to complete the payment?
Once you answer these questions, it’s time to apply the strategy to your client’s payment cycle.
Tools & Hacks To Apply The Strategy For Payment Collections
Tracking overdue invoices using automated invoicing software like InvoiceBerry can be one of the easiest ways to make sure that you collect payments on time. However, it won’t guarantee payment from your client if they have no intention to pay for your deliverables. And that’s why you need a strict protocol for any outstanding invoices.
You can be flexible when it comes to payment options, but always be firm when you deal with late payments. Set a penalty in the form of a late payment fee for any outstanding payments, and consider enlisting help from a lawyer or a collection agency if necessary.
7. Consider Giving An Early Payment Discount For Clients
If you offer a personalized payment schedule for each client, you can also give them a special price if they agree to upfront payments. Otherwise, offering an early payment discount as a reward for the clients can also be considered to avoid late payments from their end.
By giving them a discount for any payment before the due date, clients can save money by adjusting the timeline to pay for your deliverables. As a business owner, it will guarantee you to receive payment in advance, so you don’t have to worry about sending clients a series of follow-up emails.
Tools & Hacks To Give An Early Payment Discount for Clients
Giving an early payment discount is only recommended if you’re using invoicing software. Otherwise, it will be time-consuming if you have to track the clients eligible for discounts manually.
Using software like InvoiceBerry allows you to create personalized invoices, even if you use different payment terms for each client. On top of that, you can easily track your cash flow through the reports feature on the platform.
Overdue invoices and outstanding payments are two common problems that freelancers and small business owners often have to face in the process. Therefore, establishing a contract with the details of the partnerships is crucial to the success of your business.
Using automatic invoicing software will also be beneficial for your business. InvoiceBerry lets you track any unpaid invoices to avoid outstanding payments from your client, while it also saves your time with the automatic email reminder and cash flow report features on the platform.
Last but not least, it’s best to be safe than sorry when you have to deal with clients who refuse to pay for your products or services. Getting some additional assistance through a lawyer or a collection agency can be your last shot to ensure that you will collect payments in the worst-case scenario.