Cash flow is crucial for any business, but especially important for small businesses and freelancers.
To help you increase your cash flow, here are 8 tips that you can implement into your business immediately to help you get paid faster.
- 1. Manage Expectations With Clients From Day 1
- 2. Build a Strong Client Relationship
- 3. Know Who’s Responsible for Paying You
- 4. Carefully Craft Your Invoice Terms
- 5. Send Invoices in a Timely Fashion
- 6. Be Crystal Clear With Your Description of Work
- 7. Improve Cash Flow by Accepting Online Payments
- 8. Automate Following Up
1. Manage Expectations With Clients From Day 1
Don’t be afraid to give your client a contract, they expect it and you’ll avoid any future misunderstandings, headaches, and unpaid invoices. It’s also best to take the time to walk your new client through all the key deliverables and payment dates at the start of a new project.
Also, it’s not a bad time to remind them about your late payment policies, which should be included in your contract if you have them.
2. Build a Strong Client Relationship
The best way to build a strong client relationship is to be in almost constant communication with them.
Update them on what you’re doing and how things are going. Get them to feel part of the project. This also ensures that you both have a thorough understanding of the work being done.
And, that way when it comes time to invoice them, there won’t be any surprises.
3. Know Who’s Responsible for Paying You
The person to discuss your payment with will differ between clients.
For example, if your client is a small business, chances are the business owner is the person that processes payments. If your client is a mid or large-sized company then it might be their accounting department or financial controller.
At the start of a new project, make sure you have the name, phone number, and email of the person who will be processing your invoices. In fact, ask for an email introduction if necessary.
Chances are they will reply back to the note with an email that will have all their contact info in the signature. This will come in handy and save you a lot of time when you need to find the appropriate contact to address any outstanding invoices.
4. Carefully Craft Your Invoice Terms
All invoices have payment terms listed on the invoice (or at least they should).
If your client does not fully understand what they are being billed for, then they are less likely to sign-off on the invoice.
Have you ever given any thought to your terms? You might be surprised just how much they can determine how fast you get paid. In fact, the Market Intelligence team at FreshBooks studied its users’ payment terms in order to find the best invoice terms to get you paid faster. (Check out the full report).
- Be polite
A simple “please pay your invoice within” or “thank you for your business” can increase the percentage of invoices that are paid by more than 5 percent!
- Don’t use jargon
The word “days”, as opposed to “net”, will get you paid more often and faster.
- Implement late payments fees
Threatening your clients with interest on late payments does two things. It gets you paid slower, but also ensures a higher percentage of invoices will get paid.
Here is an example of properly worded invoice terms according to the study:
“Thank you, we really appreciate your business. Please send payment within 21 days of receiving this invoice.”
5. Send Invoices in a Timely Fashion
This is fairly simple but often overlooked. The sooner you invoice your clients the sooner they pay you. This simply means that each time you are due a payment (usually on a deliverable) immediately email one to your client.
In almost all companies, they cannot pay you until they have a copy of your invoice for their own records. So if they have your invoice, they can start the process to pay you, or maybe even pay you right away (especially when they’re really happy with your work).
It’s important to note here, that being able to create invoices quickly will really help you implement this tip—accounting on the cloud makes this a breeze.
6. Be Crystal Clear With Your Description of Work
Be as clear and specific as possible on your invoice. Do not use any industry jargon in your product or service description on your invoice.
If your client does not fully understand what they are being billed for, then they are less likely to sign off on the invoice.
For example, Instead of writing “website” in the description, use something more specific such as “12 pages of HTML design and development including a contact form and a site map.”
7. Improve Cash Flow by Accepting Online Payments
Put an end to payment delays with online payment processing. Accept credit card payments, give great customer service, and get paid faster.
If you’re a FreshBooks customer, you can set yourself up to be paid online with a single click. Sit back and watch payments get recorded and the money appears in your bank account – like magic.
8. Automate Following Up
In a perfect world, all invoices would be paid within minutes. Unfortunately, it’s not a perfect world. The truth of the matter is that invoices can typically take anywhere from three to twelve weeks to get paid, and that can be a very long wait for a small business – remember, it’s all about cash flow. This is why every freelancer needs to have a follow-up strategy for invoices.
Consider using an invoicing solution that allows you to quickly identify outstanding invoices through an easy-to-access dashboard or report.
This saves you a lot of time and helps identify clients that you need to follow up with immediately. It’s best to set aside a block of time each week for you to contact clients that have outstanding invoices.
With FreshBooks, you can automate as much (or as little) of your business. We can even handle following up with clients on outstanding invoices so you can focus more of your time on billable hours and less time chasing down money!
about the author
If your books are a mess and you’re looking for an easy fix, FreshBooks is that solution. It’s software that makes billing, accounting, and client service easy for business owners. Get automated invoicing and payments to save you 550+ hours/year, reports that tell you how things are going, and access to time-saving tools for your whole team. Cool right? We’ve got a website with all the details, a Twitter account that’s pretty sweet, and a Youtube channel packed with awesome videos.