Nothing is more frustrating than chasing customers and clients for late payments – especially when you diligently completed your side of the bargain on time.
Unfortunately though, as a small business owner or freelancer, getting paid isn’t always as simple as turning up for work and doing your job.
You’re responsible for invoicing your customers and making sure you get paid – but if it isn’t something you’ve had to do before, it can be difficult to make sure that you receive all payments due to you, and receive them on time.
Nine tips to make sure you get paid for your work
You deserve to be paid for the services you provide, and to help you ensure your invoices get paid, freelance writer Emily Fowler shares her nine tips.
1) Make sure your customers know what your credit policy is
You do have a credit policy, don’t you? You need to have things such as payment terms set out from the beginning so your customers know what’s expected of them.
Whether your payment terms are 15 days, 30 days or 60 days, make sure that your customers know them – and ideally this should be included in any contract you have between you.
2) Include late payment fees in your contract
If you do use contracts, include language that describes any financial penalties for late payment. For example, my contract states 5% of the outstanding balance is due if the payment is 0-30 days late, with an additional 5% added for each recurring 30 day period until full and final settlement is made.
I’ve never actually had to charge late fees on a project – could that be because my clients are aware that there are penalties for late payment, so always pay on time?
3) Invoice straight away
Once you’ve completed a project, send an invoice immediately while you’re still fresh in your customer’s mind. If you’re slow at sending invoices, you might find that your customers are equally slow at making payment!
4) Send monthly statements
If you have customers that regularly use your services, you’ll probably be sending regular invoices. To help them to keep track of what they owe and when they need to pay you, send a monthly statement that includes all outstanding invoices and when they’re due.
5) Pre-chase for payment
You don’t need to wait until payment is overdue to chase, a quick and friendly phone call or email before an invoice is due for payment to make sure that they haven’t got any queries is perfect for making sure that your invoice hasn’t ‘slipped their mind’.
What if you’ve done all this and you still have customers who don’t pay on time?
6) Pick up the phone
It’s much easier to ignore an email than a real person on the phone – so give your customer a call as soon as their payment is late. It might be that they have a genuine reason for not paying, and having an actual conversation means that you can get to the root of the problem more quickly.
7) Keep lines of communication open with late payers
Once you have a late payer, keep in regular contact with them. Don’t let them forget about you – or even think that you’ve forgotten about them!
If you’re not naturally a confrontational person, you might feel awkward about being pushy, but at the end of the day you’re running a business. Your customers will be doing exactly the same thing with their late payers, trust me.
8) Know your rights
Even if you don’t have late fees included in your contract, UK businesses can take advantage of The Late Payment of Commercial Debts (Interest) Act 1998, which was amended in 2002 to include fixed penalties for late payment in addition to interest payable at 8 per cent over Bank of England base rate.
For debt of less than £1,000 the penalty is £40, rising to £70 for debts up to £9,999.99 and £100 above that.
9) Know your options
If you’ve followed all of these tips and you’re still facing an unpaid invoice, it’s essential that you know what options there are for debt recovery.
Depending on the amount of money owed and the customer’s situation, you have a number of options available to you, from debt collection agencies to issuing court proceedings. This article from The Law Donut is very helpful if you’re struggling to decide the best route to take.
You deserve to be paid for your work – so make sure you are!
It’s likely that you started your own business or began freelancing to follow your passions and to achieve a flexible work life, so don’t let non-payment cause you unnecessary stress.
When you work with a customer or client, never forget that you deserve to be paid for your efforts.
Emily Fowler is a freelance writer from Warwickshire, with a background in business and finance. She writes website content and business communications for her clients, and for national pet consumer and trade magazines. Visit Emily’s website.Emily Fowler