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If you’re running your own business, you know that outstanding invoices can play havoc with your cash flow. These nine guidelines can help you get paid more quickly:
- Capture the terms in writing. Before starting work, share a written summary of the project’s scope and fee with the customer. This helps minimize future disagreements that can delay payment.
- Negotiate partial payments. For larger projects, try to negotiate installment payments to be issued after you complete specific stages of the assignment. This offers some assurance that even if something unusual occurs — say, the project is canceled before completion or the customer runs into financial trouble — you’ll at least receive something for your efforts.
- Invoice promptly. It’s easy for this important task to get pushed aside by the crunch of ongoing business. The more quickly you invoice, the more quickly you’ll be paid.
- Invoice accurately. Ensure that you’re sending the invoice to the right person at the right address. Sending it to the wrong addressee will delay payment until it lands in the correct inbox. Double-check arithmetic, as errors also can lead to delays. If your customer requires a purchase order number to issue payment, obtain one and include it on the invoice.
- Break out the charges. Provide enough detail that the customer can easily identify the services or products for which he or she is being charged.
- Offer payment options. Customers may pay more quickly when they can use the method they find most convenient — whether they prefer paying by credit card, by check or via an online payment platform.
- Consider early payment discounts. You can motivate some customers to pay more quickly by offering to shave a percentage from the invoice total if they pay before the agreed-upon due date.
- Send a reminder. A polite email reminder, sent before payment is due, can nudge customers who may have overlooked your invoice. Some software programs can be programmed to send reminders automatically.
- Follow up. Contact the customer once you notice a payment is late. A polite email reminder asking the customer to correct the oversight often is enough to prompt action. But if you’ve sent several emails and still haven’t received payment, a phone call may be in order. Many people find it harder to ignore or evade questions over the phone.
Throughout the payment process, remain polite. Especially in larger companies, it’s possible the person with whom you’re talking isn’t aware your invoice is overdue. Polite assertiveness can help you both get paid and maintain a good relationship with the customer.