Did you know that almost 50% of independent contractors have problems getting paid on time?
It’s a known struggle among those who work with clients that sometimes sending out an invoice is simply not enough. And combine that with the fact that many do not use client agreements makes it a lot worse. So what can you do to get more consistent payments get paid faster?
Here are a few tips:
Use a Contract
I’m always surprised by the amount of folks providing services without a proper client agreement in place.
But on the other hand, this is how business attorneys make money. The phone calls are endless about someone not getting paid because a customer didn’t hold up their end of the bargain.
So get it in writing. Start the relationship off right with a well written contract. And don’t use just any bare bones agreement you find online. They will not be detailed enough.
My contract templates are specific and include service charges and collection fees. Let clients know that you will charge fees for late payments and any hassle chasing down payments.
Call it tough love and get your coins!
Use Explicit Payment Terms
Describe exactly how you want to be paid whether it is a one-time flat fee, monthly payment or with a deposit and the remainder due upon completion. Deposits and monthly retainers are popular because they provide more reliable income.
If you want to get paid faster, consider invoicing more frequently. Don’t want to wait 30 days for payment? Then your contract should require payment within net 10 or 15 days of receipt of the invoice if that works best for your business.
Large companies use net 30 days or 45 days because they have the cash flow to wait that long for payment. Most small business do not. So set yourself up for more consistent payments from the start.
Credit Card Payments
Sometimes something as simple as setting up recurring credit card payments makes a huge difference with clients. Make things simple for them. You can also use invoices that allow clients to pay by credit card directly from the invoice.
Though some clients prefer checks, it’s a slower process. Use the option of credit card payments to speed up incoming payments and increase your cash flow.
Be More Selective
It can be hard to be picky when you need to make a living. But in the long run, it’s not worth chasing down clients to get paid.
Sure, they may be pleasant to work with but if you have to make multiple phone calls and emails to plead for payment then you’re losing valuable (money-making) time.
You can find a better client who will pay you. You’ll never get the time back.
So try to weed out slow or non-payers when you can. And ask your best clients to make referrals. They usually associate with like-minded entrepreneurs who will also make great clients.
Need a Solid Contract Template?
Visit my online contract template store, Legal Goodness, where I have all types of agreements for different niches. And if you don’t see something, let me know. I’m always adding new contract templates to the store.
This blog posting is provided for general informational and educational purposes only and is not provided for specific, individual legal advice.