How to Get Paid Faster
Working as a contractor can bring a lot of freedom to your life. You can work when you want, how you want, and with whom you want. However, many small business owners who perform services for others often complain about not getting paid. Their clients often pay them late, and it makes for a frightening cycle of feast or famine. There are a few tips that you can use to get paid faster.
1. Consider Billing More Often
If you normally take a deposit and then bill after the project is done, try billing instead in small increments as the project is completed, such as once a week instead of once a month. Clients are more likely to pay a smaller invoice faster because it doesn’t take as much of a scary bite. Plus, they will be concerned that you won’t keep working on their project without payment.
2. Provide Incentives for Early Payment
You’ve probably seen it on bills before: “5%/7 net 30” This means that if the client pays within 7 days there is a 5 percent discount. If they pay on the due date it’s the entire amount of the bill. People love getting discounts. They are very likely to do this if their bills are substantial, to get that savings. Thus, you are paid faster.
3. Charge a Late Fee
Many contractors don’t implement a late fee, but you should. You can always choose on a case-by-case basis not to charge it, but it should at least be in your contracts and on your invoice that you charge a late fee of around 1.5% per pay period if an invoice is paid late. Typically most people only charge late fees after 30 days.
4. Offer Multiple Ways to Pay
If you offer multiple ways to pay, your client will have options even when they’re short on cash. If you use PayPal you can actually accept credit cards. But, just because you take PayPal doesn’t mean you can’t also accept a check. In fact, depending on the type of bank account you have, it might cost you less to take checks due to the fees associated with PayPal. It could be a win-win for both you and your client.
5. Charge in Advance
If you are having a lot of issues with people not paying on time, start charging the whole fee in advance or as close to it as you can. Getting up-front payment through package rates, or a group of hours, will help you avoid chasing down people to get them to pay. Many contractors such as virtual assistants use this method very successfully.
In addition to these ideas, don’t wait around for your client to contact you when they are late paying an invoice. Send them a reminder invoice or better yet, call them immediately. The sooner you call them and hold them accountable when they are late paying, the sooner they are going to pay you. Remember that the squeaky wheel always gets the grease.
It may be uncomfortable to confront someone when they have not paid you on time, but it’s an essential part of business. If you are too uncomfortable to confront clients, consider hiring a virtual assistant to do it for you.