We are generally industry agnostic when it comes to the clients we serve, but we count a significant portion of our clients from the professional services industry. As such, we have developed deep understandings of specific concerns that those in the professional services industry experience frequently, such as the payment cycles of clients. From late paying to non-paying, we know that getting clients to pay bills is a particular pain point in the services industry.
For example, you get to the end of a project, send the invoice, and you wait. Weeks pass, and you still don't have anything to show for your work. Late client payments do more than throw off your company's accounting — they could also cause major stability problems for your business. Entrepreneur reports 82 percent of small and startup business failures result from issues with cash-flow management. Use these five tips to get your invoices handled on time.
Establish Exact Payment Terms
Sometimes your clients make the wrong assumption about payment terms. They may think you operate on a net 30 basis or require payment on specific days, such as the 1st and 15th of the month.
Add a contract section explaining payment methods, due dates and other relevant details. When you're working this form out with your clients, find out whether they require a specific invoice format or use an in-house system for submission.
Reward Early and On-Time Payment
Offer a Recurring Payment Option
Are you working on a long-term basis with the clients? Use a recurring payment option so you both can focus on the project rather than worrying about billing dates. If you offer the same services each month, you have an easy time getting this setup.
You may run into some difficulties if you have varying payments each month. Your clients may not mind an automatic payment going out for these expenses without manually reviewing it. If they do, set a base amount for the recurring invoice and show the clients any additional costs before you add them on.
Automate Your Invoice Process
Sometimes you don't get paid because you forgot to send out your invoices. Use a system to automatically send the bill once you complete the project or ship out products. You can schedule in payment reminder emails so you don't have to chase around perpetually late-paying companies. Outsourced accounting and bookkeeping services are another valuable option for staying on top of your accounts payable and receivables.
Add Payment Links Directly in the Invoice
Clients might intend on paying immediately, but they need to open up another program or browser tab, log in to their accounts and then send money. They may get pulled away from the computer and have their session time out before they get back. The clients don't want to repeat all the steps, so they leave it until the next day. This scenario plays out a few more times while you get frustrated at the lack of action on their end.
If your invoicing system supports it, integrate payment links or buttons directly in your invoice. Your clients are a click away from paying you for a job well done, which reduces the chances of any distraction stopping them from the task at hand. The easier you can make this process, the better.
In a perfect world, invoices get paid as soon as they land on a client's desk. In reality, you could use a helping hand to keep your cash flow going strong. Incorporate these strategies into your current payment procedure to keep your client relationships strong and your financial stress low.
Wondering if you are experiencing any major accounting problems? Check out our guide to the 7 biggest problems in bookkeeping.
