Following up with clients on invoicing can be a sticky situation to deal with, especially when their payments are long overdue. That’s why we asked six entrepreneurs from FounderSociety (FS) the following question:
Q. I’m struggling with cash flow. What is one thing I can do to ensure my clients pay on time?
1. Don’t Be Afraid to Use Late Fees
That’s what they’re there for! Once an invoice is past due, add a $50/day late fee, and let your customer know you will be doing so. (Services like FreshBooks make it easy to update without having to send the client a new invoice daily.) – Rachel Hofstetter, Guesterly
2. Build Relationships
Meet your bigger clients face-to-face and make the case for why you need them to pay on time. An in-person meeting always makes you more than just an invoice in their books. – Lisa Curtis, Kuli Kuli
3. Give a Discount for Prepayment
Reward your responsible clients by giving them an incentivizing discount for prepaying in one lump sum upfront. Even if a small percentage of clients take advantage of this, it will give you an injection of capital to either invest wisely or even simply offset those who slack. – Laurie Davis, eFlirt
4. Automate the Billing Process
One of the best ways to make sure clients pay on time is to simply automate the process. There are several automated invoicing services out there (such as FreshBooks and QuickBooks) that allow you to set up clients, insert billing dates, and invoice payments. Not only will this remind clients to pay on time, but it will also free up a few hours every month that you might have spent on invoicing. – Zac Johnson, Blogging.org
5. Enlist the Help of Your Accounts Payable Department
Try shortening invoices to 15 days, integrate this into contracts, and point it out when starting new relationships with clients. Also, get invoicing off your plate and into the hands of an admin accounts payable person, or someone (anyone!) on your team who is able to play the “bad cop.” Let them shake your clients down for money so you can stay in your place of power with the customer. – Malachi Leopold, Media Lark, Inc.
6. Send Your Invoices on Time and on a Regular Schedule
Set the standard of showing your clients that you are timely by always submitting your invoices on time and on a regular schedule. Sending invoices ad hoc sends a bad message to them: it opens up the door to them thinking on-time payments are not crucial. – John Arroyo, Arroyo Labs, Inc.
About FounderSociety
FounderSociety is an invitation-only organization comprised of ambitious startup founders and business owners.
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