Get Paid Faster

Chances are, you’ve had at least one client who didn’t pay promptly for a project you worked hard on.

It’s imperative to learn how to receive prompt payment from clients. Not getting paid on time can lead to cash flow problems and can hurt your business’s operating capacity.

One way to expedite the payment process: Make your invoices both clear and correct, says Wes Trochlil, president of Effective Database Management, Hamilton, Va., which provides data management assistance to organizations.

“Too often, invoices are vague or inaccurate, which leads to payment delays because the customer doesn't understand what they’re paying for,” Trochlil says.

Offer Incentives
Another way to expedite payment is to offer a discount for payment made in advance of a project, Trochlil says. “Make sure the discount is significant—at least 10 percent. Small discounts will rarely be taken, especially for payment in advance, but discounts of 10 percent or more will be taken much more frequently.”

Online Invoicing
Laura Ward, chief operating officer and co-founder of Strategic Vision, a Georgia-based public relations firm, says online billing has significantly improved the time it takes to receive payment. “All of our clients receive their invoices through email. Our customers really like this because they can always find current invoices, as well as refer to them for future reference.”

Online invoicing also carries critical advantages for companies and contractors, “Invoices go out around the first of the month and I can manage things remotely, no matter where I am. With my travel schedule, there are times that I can’t be in the office for billing. But I can invoice on the road as long as I have an Internet connection,” Ward says.

Provide Payment Choices
To further improve client payment, Ward’s company also offers customers three payment options: check by mail, PayPal and credit cards. “Those who choose to pay by PayPal or credit card do so on a revolving basis. They automatically get charged on the same day each month, so they don't have to be reminded and we don't have to remember to invoice. This is a huge timesaver and has increased our receivables dramatically.”

If an extra item needs to be billed outside of the retainer, it is billed in a separate invoice, Ward adds. “This helps our clients see what extra expenditures are accruing, without delaying paying their main invoice if they think there’s a discrepancy.”

Get Creative
Don’t dismiss the value of creative invoices in motivating customers to pay promptly. “One of the most innovative things I’ve seen done with invoices (typically an 8.5 x 11 page) is to use the back side to tell the story about a new product or service that's available in the market, a new service that your offer or a customer story or case study where you really came through for them” says Paul Travis, marketing consultant with OneAccord in Seattle, Washington.

With a focus on getting prompt payment, Travis says another angle could focus on getting payments on time--make the story on the back about a special gift or program available only to customers who are current on their payments. This doesn’t have to be expensive, says Travis, who is also president of the Institute of Management Consultants in Bainbridge Island, Wash. “It could be a book bought in quantity so the customer receives real value, priority scheduling where you give the best payers the first slots of the morning, or a custom e-book about the secrets of the trade.”

Additional Tips
Ryon Gambill, president and CEO of Marauder Corp., a collections agency in Indian Wells, Calif., offers these suggestions:

• Add a bold due date to your invoice.
• Make a courtesy call to verify your customer received your invoice. This is especially important if this is their first credit transaction with you.
• Make certain that all customer service issues are addressed immediately so they cannot later be used as an excuse for withholding payment.
• Do not accept temporary checks with handwritten account numbers on them, or checks numbered less than 200.
• If the credit transaction is being done in person, verify the customer’s identification. If the credit transaction is being done over the telephone, attempt to verify the customer’s information via telephone directory or a Google, Zaba or other search engine.
• Have the customer sign and date the invoice or bill to ensure protection against fraudulent charge-backs or stop payments.
• Start collection efforts immediately when the account or invoice becomes past due. Even reputable companies and consumers run into financial difficulties, but it’s important that you stick to your policies and inform your debtors when they are late on payments.

Don’t take it personally when a customer is unwilling or unable to pay—and don’t give up.