Having plenty of work from customers or clients is great, but getting paid in a timely manner is even better. Use these nine tips to get paid faster.
One problem that can hamper small businesses and independent contractors is how long it takes to get paid after they have delivered their products or services to their customers. Consumers and smaller businesses may have their own cash problems and pay very late or not at all. But even when your clients are government agencies or big corporations, there’s still a chance your payments can be delayed for weeks or even months in certain situations. Red tape and minor glitches can cause delays of six months or more between the time an invoice is supposed to get paid and when the check actually arrives.
What can you do to solve the problem? How can you speed up payments from customer and clients?
10 Ways to Get Paid Faster
- Get some or all of your money in advance. You can ask the customer for a deposit on the work you’ll perform or require full payment before you deliver a product or perform a service. If getting paid in advance is very unusual in your industry, consider offering a small discount to a big client for payment in advance.
- For phone orders, ask for the customer’s credit card. Train your employees (and yourself) to ask the customer for credit card information when they’ve taken the customer’s order. Never ask, ”How would you like to pay for that?” If you ask a customer how they’d like to pay, they’ll usually say “Bill me” or “Send an Invoice.” You’ll pay a fee for accepting credit cards, but you’ll get paid faster plus you’ll save the cost of the time it would take your employee to bill and to follow up if the invoice isn’t paid on time.
- When you must invoice customers, do so promptly. If possible send them out the same day. Your goal is to get your invoice to the customer soon enough that it gets paid the next time they pay their bills. If they pay once a month, and your invoice arrives the day after they’ve cut checks, you’ll need to wait an extra 30 days to get paid.
- Include a Due Date on your Invoices. You can include a phrase such as “Due By” followed by the specific date you want to be paid, or you can include a statement saying that payment is due in 30 days, or whatever term you’ve established.
- Make any discount for early payment prominently visible on your invoice. Some businesses will pay invoices sooner if you offer them a slight discount (2% is common) for paying within 10 days or less. If you’re offering any such discounts for early payment, make that notice prominent on your invoice and specify exactly what the time frame is for a payment to qualify for an early payment discount.
- Be sure your customers have a current W9 for your company. Businesses often require a W-9 form before they will issue payment, so if you’re working with a business for the first time, ask them if their accounting department will need a W9 – or just send it automatically with your first invoice. The W-9 form provides the company with your business name, address and tax identification information (Employer Identification Number (EIN) or if you don’t have one, your Social Security number.) They use the information you provide to file required 1099 MISC forms reports at the end of the year.
- Send the right invoice format to the right person. Your contact at the business may not be the person who should receive the invoice. Ask to be sure what invoicing procedures you should follow. Find out who should get them and how they should be sent (ie, in email, through an electronic payment network, on paper through traditional mail). If you have to send a printed copy of the invoice, be sure you have the correct address for the company along with any mail stop or other designation to get it to the right person and department.
- Make sure your invoice includes all necessary details, such as the purchase order number or contract number, the name of the project, your company name, your employer ID (or social security number), your address and telephone number, a detailed list of products or services delivered (and the item numbers if appropriate), the work done (if you bill on an hourly basis), and the invoice total. The goal here is to provide the client with all the information they need to approve the invoice process it for payment.
- Be willing to accept payment using whatever system your client prefers. Consumers often want to pay with a credit card and some may prefer using a mobile wallet or PayPal. Many businesses pay invoices of certain sizes with credit cards. Others may require you to sign up for a payment network like Paymode-x.
- Be willing to accept direct ACH payments from larger customers. Yes, you’ll have to provide the customer with your banking information, but you should be able to set things up with your bank so they can only transfer money in, not out. You could also set up a separate business account just for receiving ACH transfers, and then move the money out as soon as it’s received. That would keep your main operating account inaccessible to companies transferring money to you.