Don’t you hate it when people say they’re going to do something and they don’t do it or don’t come through? It happens with repairmen, who make an appointment and don’t show up on time, it happens when vendors promise a product, but don’t deliver and sometimes, it happens when clients, who say they’re going to pay you, don’t.
I have a client who just couldn’t seem to get her clients to follow through on paying her. She would send her invoices out on time, but for some reason, clients gave her excuses and didn’t pay. We took a look at the reasons why and put together some best practices for getting paid every time. Here are some of them:
- MANAGE ACCOUNTS RECEIVABLE – Whether you’re a lawyer, doctor or service professional, I have no doubt you keep current on the latest advances in your field. Hypervigilance is a good idea when it comes to invoicing, and that’s why managing your accounts receivable more closely is a key to getting paid every time and positive cash flow. If you invoice a client on Monday, your business or office manager needs to follow up on Wednesday. If you haven’t heard back from the client by the end of the week, you may need to e-mail or call the client yourself or have your office manager do it from your computer.
- CHARGE A FLAT FEE – Instead of offering hourly billing, charge a flat fee. If you plan to do this you will need to learn how to estimate time, so you can give clients an upfront quote. While remaining conscious of the bottom line. To do this, you should estimate how long you think the case, if you’re an attorney, is going to take to resolve, multiply it by the desired hourly rate, then double that figure… yes, I said double it! For instance, if you have a huge case totaling $100,000, ask for the entire amount. If you’re a litigator, you could ask for half of the payment before you even begin the work. It’s a calculated risk, but don’t be afraid to take it.
- REQUEST YOUR ENTIRE PAYMENT UP FRONT – Obtaining your entire payment up front is the best way to ensure getting paid every time. It may sound unrealistic, but if you don’t do it, you are taking a huge risk and here’s why. How many times have you taken on a new job or client and after weeks or months of work, the client changes his or her mind about something. In turn, your client becomes upset with the outcome and then when it comes time to pay, holds that against you. I’ve seen it happen way too many times.
- MAKE IT EASY FOR CLIENTS TO PAY YOU – You should offer clients multiple ways to pay you. Credit card processing is a must. There are fees involved, but the fees are worth it if you get paid sooner. Reach out to my trusted credit card processor, Dayana Muzinek, at email@example.com, to start accepting credit cards or to get a free credit card analysis. Another innovative method is to set up a pre-authorized payment or bank draft directly from your client’s bank account; this is called an ACH or Automated Clearing House. ACH is a written authorization from your customer to debit their bank account. Offering your clients more than one method of payment means you will get paid sooner and paid every time.
My client was having a hard time getting paid for a variety of reasons. We used some of the best practices above to change that and now, she’s happy that her cash is flowing again. Try any of the strategies listed here. Or, e-mail me at Elizabeth@brigadebookkeeping.com — my team and I will make sure you get paid every time.
Have a great week!