I have been in the financial world for over 25 years, and I believe that most people want to pay what they owe. I also believe that the more effectively you communicate how and when you expect to be paid and make it easy for people to pay you, the more likely you are to be paid on time, most of the time.
I get my electric bill every month on the same day, by email. I can pay it with two mouse clicks. It is amazingly simple, and I pay it instantly every month.
Your payment terms must be clearly communicated to customers before you do the work, and then reinforced when you bill them. Use a contract, even a simple one, to outline your payment terms. It is not enough simply to payment terms on your invoice afterwards. Customer must agree in writing beforehand.
Once you have a customer, how do you make it easy for people to pay you?
- Follow up with your customer immediately after the job is finished. Make sure you have the right billing contact. Use the opportunity to thank them and ask that they are pleased with your service.
- Your bills must be sent promptly and must be easy to understand. Sending them consistently on the same day every month should be your goal. Remember, you are trying to build good paying habits with your customer, so show them your good billing practices.
- Require a deposit before you start a project. Customers with skin in the game are more likely to want to continue paying.
- As your customers how they wish to receive their bills. These days many customers want to receive their bills by email.
- Offer a discount for prompt payment. You will be surprised how many people will take advantage of your offer.
- Accept credit and debits cards, ACH, PayPal, ApplePay and any other method of payment.
- Consider a payment portal on your website. I have one, and its use increases every month.
- Offer payment plans. Make sure to document them, with terms for repayment as well as the consequences if the payment plan is not followed.
Getting paid on time is not really hard. You can control it, and you should.