You labour. Then you invoice and get compensated. That’s the definition of business. Yet, what if your clients take their sweet time when it comes to compensating you? You need cash now. But in this case, your sense of urgency and that of your clients probably aren’t the same. Cash flow is important to every business. However, when you are a freelancer running a creative business — and your livelihood depends on your clients’ payments. The quicker you can get them to pay an invoice, the better.
So how do you make that happen? While you can’t force your clients to pay your invoice faster, you can do some things on your side of the transaction to make it easier for your clients to do so. Here are six ways that you can help them put money in your pocket as quickly as possible:
Don’t drag your own feet
If you want to get paid quickly, you need to invoice quickly as well. Obviously, your clients can’t pay you until you’ve invoiced them. So sending that invoice, and doing so in a timely manner.
The problem that creative freelancers often have with invoicing clients, however, is they ‘hate’ it. For many designers, writers, and other “creative-types,” working with numbers is not a strong skill set. They avoid it like the plague. But if you want to be paid quickly, not sending out your invoices only compounds the problem.
The solution is two-fold. The first part is to adjust your thinking. Remember why you invoice. You worked hard for your clients. It’s time for them to compensate you for that work. Close the sale. Get your hard-earned money. Think of invoicing as your most important “income-producing activity.”
Second, make it easy on yourself to invoice clients. Use an intuitive accounting software that takes the pain out of invoicing for a creative like yourself. When invoicing is simple and easy to do — you’ll do it. And, you’ll start to LOVE invoicing, because doing so means you’ll get paid sooner rather than later.
Consider invoicing on the 1st of the month
Many freelancers don’t realize that companies, especially larger corporations, have to deal with very defined billing cycles. Managers have to get their monthly invoices into the accounting department by a specific date — often by the 15th or even earlier — if they hope to have a check cut for that biller by the end of the month.
That means, if you send your invoice on the 16th of the month, your invoice won’t get paid until the next cycle — probably the last week of the next month.
By invoicing on the 1st, you give managers time to turn in your invoice, and you’ll most likely get paid before the end of the month.
Create and communicate clear terms on your invoice
On your contracts or on your invoices — but definitely, somewhere in writing — you need to clearly communicate your terms for payment. This should include when payment is to be made (your “net” due date) and also a financial penalty for missing that date.
First, in considering your due date, know this: Asking for payment “upon receipt” is equivalent to asking your clients to send you the content you need “as soon as possible.” Both mean NOTHING. You’ll be paid when your client decides the time is right, and no sooner.
Give your clients a definite deadline for payment. If you keep in mind the aforementioned billing cycle, a two-week deadline or less is probably too tight. Be reasonable with your expectations for payment, and give your clients at least a three-week deadline, if not a full month.
Make it clear how your client will be penalized for not paying your invoice by the deadline. Normally, this is in the form of a mild interest payment that is tacked on every month the total isn’t paid. There are laws that govern that, so make sure you are above board for the laws in your area. For most states in the U.S., a very small percentage — such as an additional 0.5 percent per month — should be acceptable. But check your government laws first to be sure.
Of course, most clients would rather pay on time then incur the extra expense, no matter how small. Just make sure that you make good on your threat if someone doesn’t pay; otherwise, your “penalty” — or lack thereof — will have no power to motivate your clients.
Be open to direct deposit
Many corporations are very willing to put their regular freelancers on a similar payment schedule as they have for their employees, and as such, they will do direct deposit. Electronic payments are not only faster for you — they are more efficient for your clients as well, and more financially prudent, too. As such, most companies would rather pay you electronically than by check.
From smaller businesses and individuals, Popmoney and Chase QuickPay are examples of ways that you can get your money faster by getting it electronically — and again, there are similar benefits for both sides. Do not be afraid to ask your clients to pay electronically. More often than not, you’ll be doing them a favour.
Take credit cards
Individuals, in particular, can’t always generate, on demand, a paper check written out for a large amount. So they might hang onto your invoice longer until they have enough funds to pay you.
On the other hand, most can pay you immediately with a credit card. With electronic payment, they will probably find using a credit card easier to use. They are more efficient, and better for tracking transactions for tax and expense purposes.
While you will have to pay fees to the credit card company, having money in your hand faster might be just worthwhile be enough to start accepting credit cards.
Set up automatic payments
If you are providing a monthly service and invoice a client the same amount on a regular basis, you might want to consider putting that client on an automatic payment plan. Once set up, the monthly amount will be electronically charged to your client’s credit card or payment account automatically. Examples of when this makes sense would be monthly repeating retainers or when providing a cyclical, flat-fee service every month (such as providing a monthly SEO report for a client’s website).
On the same day every month, your client’s credit card or account would be charged, eliminating the need to wait for your client to feel so moved. PayPal and many other financial service companies, provide a means of accepting automatic payments. Such services make it easy for your clients to pay you — and you can feel secure in knowing that payment is truly on its way when it should be. And with an invoicing app such as Albert, you can easily add your Paypal details on your invoice, giving your clients the convenience to decide between paying through bank transfers or Paypal.
The easier, the better… and the faster
Most likely, your slow-paying clients aren’t trying to be malicious. They understand that there are two sides to every business transaction and are more than willing to pay you for the services you rendered. But when a process is difficult and uncomfortable, the end result is avoidance.
Most likely, your slow-paying clients aren’t trying to be malicious. They understand that there are two sides to every business transaction and are more than willing to pay you for the services you rendered. But when a process is difficult and uncomfortable, the end result is avoidance.
Our Favourite Invoice Tools
Recently acquired by Fivver, and.co takes care of a lot of the basics when it comes to invoicing and accepting payments. With and.co you can even set up recurring payments, automatic invoicing and more. Check it out today
For more complex accounting needs we recommend Freshbooks. Freshbooks allows for you to track business expenses, bill project expenses to clients. Freshbooks is amazing because it not only deals with invoicing and accepting payment but it also makes you accounting a breeze come tax season.
Let us know your favourite tool in the comments below!
Don’t let these tips slip your mind the next time you have a slow-moving client. Add this to your freelance tips Pinterest board and get those invoices paid on time, every time.
