For an independent professional, there’s nothing worse than a client who doesn’t pay their invoice on time. After investing a significant amount of time and effort into completing a project, meeting deadlines, and ensuring client satisfaction, it can be frustrating to have to spend even more time chasing down payment.
The best way to handle payment problems is to prevent them—as much as possible—from happening in the first place. Sometimes, however, problems are unavoidable and you’ll need to take action. Here are 10 guidelines for helping payment collection run as smoothly as possible.
Without a written policy in place that clients agree to at the beginning of a project, problems can quickly arise. This policy should outline when payment is due, as well as what steps will be taken in the case of nonpayment. By discussing these scenarios with your client ahead of time, you can avoid awkward or difficult conversations down the road.
No one wants to be embarrassed by demanding payment when payment has, in fact, already been made. Be sure to keep careful track of payment milestones and ensure payments are applied to the correct amount.
Invoices should be sent out immediately upon completion of a project, or, if it is a regular invoice, at the same time each month. Delays or variations can give the impression that your business is either not serious about due dates or not organized in your accounting.
With an already full schedule, it can be tempting to follow up on late payments half-heartedly or sporadically. But doing so will only reinforce the delinquent client’s perception that they can continue to delay payment. Instead, create a step-by-step, detailed plan that you follow in every single case until payment is received.
Sometimes, a late payment is simply a case of sending an invoice to the wrong address or email. Addresses, phone numbers, and email addresses do change, so be sure to update contact information on a regular basis to guarantee clients receive every invoice.
Letting a late payment slide once in awhile might seem like a friendly thing to do, but it can backfire. Once you let it happen once, it is bound to happen again. By addressing late payments early on in a client relationship, it’s much less likely to become a recurring problem.
Clients will sometimes try and put you off by avoiding your phone calls or ignoring emails. Don’t get sidetracked by waiting for a return call or response for too long—specify in your communications when a client needs to contact you in order to avoid further delay.
Early on in your collection communications, specify a non-negotiable due date for payment that you can use as leverage throughout the payment process.
Make sure to apply every payment you receive to the appropriate account immediately in order to avoid duplicate billing. Clients will appreciate this effort and it will help to keep your accounts in order as well.
In the rare case that you are still unable to obtain payment from a client, it may be time to take legal action. A lawyer can write a demand letter—a certified letter that threatens legal action if a debt isn’t paid. Generally, this will be enough to get a client to settle their payment.
Following these 10 guidelines won’t prevent every late payment, but they will help you deal knowledgeably and consistently with every instance of delinquency you encounter—and they just might get you your payment that much faster.
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