Nibletz Staff
Getting paid on time: it’s a perennial problem for almost every small business. Something like 85 percent of small businesses say that they have had a problem with getting paid on time at some point. And it’s a problem that often threatens their very existence. What’s so sad about this is that clients are usually able and willing to pay. It’s just that making the actual payment slips their mind. For small companies reliant on revenue, this is a big problem.
So what’s the solution here? Well, clearly it’s not a good idea to stay silent, especially if your business is about to go under. At the same time, high-pressure tactics might not work. Plus, you may actually end up losing business in the future. As entrepreneurs, we’re always looking for a win-win outcome. So let’s take a look at some of the smart ways you can get your clients to cough up the money they owe you on time.
Use Positive And Negative Reinforcement
There’re two ways that you can motivate people to do something. The first is through positive reinforcement. This is where you incentivise the payment itself. For instance, you could offer money off to people who pay early. Or you could offer reward points to people who pay on time. The trick here is to provide just enough of a reward to get your customers to send you payment.
Negative reinforcement is the reverse. If payments arrive late, charge a late fee. If the client refuses to pay, come up with an amount that the agree to pay. Which methods you use depend on the type of business you are in. Payday lenders might want to charge late fees, cement suppliers might not.
Make Payment Convenient
We live in a society where so much is possible with just the click of a button. In fact, people have gotten so used to convenience that invoicing has become a real chore. The good news is that with the rise of e invoicing, it’s now much easier to bill clients. Invoices can be sent via email with payment methods attached. Paying an invoice from a business is theoretically no harder than buying a product through an online store.
Start Making Use Of Retainers
Charging customers one-off bills for every job you complete is a time-consuming and risky endeavor. There’s a large admin cost, and the payment can easily be late. Setting up a retainer is a much better idea. Clients who pay a retainer fee pay a given amount to access your services each month. Because it’s a recurring payment, it’s more likely to be paid automatically. And that means that you get a more consistent and predictable income. There is a cost, though. Retainers will usually net you less money overall than charging for services a la carte.
Ask For Payments Up Front
Starting work on a job before you’ve been paid is risky. But it’s something that happens all the time in business. For customers you know well, this isn’t a problem. But for new clients, it can be tricky. Ask new customers for a deposit or small payment upfront to build trust. This way, you know you’re more likely to get paid and feel good about the project.
