Putting up with a late-paying client every now and then is definitely annoying, but it usually won't break the bank. If late payments become a regular occurrence, however, you yourself could likely be part of the problem. Here are 5 ways to avoid a cash crunch by doing your part to help clients make their payments on time.
Verbally read over contracts together
You just received a signed contract from your client. But does that mean your client actually read it and remembers all the details—including payment deadlines? Don't just get a signature from them and tuck the contract away in your file cabinet. Call your client on the phone (or better yet meet in person) to verbally go over important sections of the contract, including when you're expecting to get paid.
Remind clients of upcoming payment deadlines
Ignoring payment due dates isn’t something most clients do on purpose. Maybe your invoice got lost with the two dozen other invoices on their desk. Perhaps someone at your client’s business entered the wrong due date into their accounting system. If progress billing is included as part of a current project you’re working on, consider a short, friendly reminder about upcoming payment deadlines about a week beforehand.
Don’t be late with your invoices
Mistakes happen. It’s easy for an invoice to get overlooked by you, your office manager or another employee. With a project management software solution like Core, ArchiOffice, EngineerOffice, or BillQuick, you can schedule future invoices at the time a new project is set up. You'll receive an e-mail reminder just before an invoice or batch of invoices have been scheduled to go out.
Make it easy to make payments
That’s great that your clients always receive your invoices on time. What if it’s a hassle to make a payment? Don’t make clients write a check and snail mail it back to your accounting department. Your firm should offer at least one online option for making payments, whether it’s through PayPal or another payment processing company. These companies can usually have payments in your bank account by the following business day.
Beware if one of the first questions from a prospective client is, “How much will this cost?” This may be a sign of price sensitivity that could create more trouble than the project is worth. Most A-list clients will always pay your invoices on time and won't question your fees. When possible, say "Thanks, but no thanks" to prospective clients who may not be a good fit for your firm.