You Can’t Get Rich if You Don’t Get Paid

You Can't Get RichIf You Don'tGet PaidIt is the ultimate business bottom line—no pay, no profit. If you are scraping by on IOU’s, it is time for a change.

 

You work hard to run your business, produce a product, or provide a service, and deliver on time. You expect to turn a profit by being paid in a timely way. Unfortunately, small business does not work that way a lot of the time.

 

According to a recent survey by cash flow tech company Fundbox, about 64 percent of their small business clients are routinely paid late. And it is not necessarily that small businesses are always the culprits too stretched to pay on their bills. It is also big clients, like Walmart and McDonald’s, who routinely pay late. Go figure.

 

It is hard enough being an entrepreneur without working for nothing. When you make a sale—you need to get paid.

 

Taking care of business—tips to make sure you see the money

 

You have your own bills and employees to pay, you cannot spend another week wondering when the check is going to be in the mail from your big client. The longer an invoice goes unpaid, the less likely you are to be paid in full.

 

Take these tips to heart, and to the bank, when you want to get serious about a cash flow problem caused by late-paying clients:

 

  • Know your customer: When you have been in business for yourself, it does not take long to develop a sixth sense for which clients are going to pay, and which are not. But you should not have to count on experience, or telepathy, to get paid for your time or products. If you develop and deliver goods, be sure you have a contract in place to protect your profit and spell out terms of payment. Consider building a discount into your price point for clients that pay early—and don’t think twice about a percentage penalty for late pays.

 

Some experts counsel against a late fee, saying it is just incorporated into the cost of doing business. Bottom line? You don’t want to be doing business with people that pay late! Small businesses cannot work for those who do not pay—make your message at the outset as you discuss initial delivery and payment terms.

 

Be sure to stay on a first-name basis with personnel responsible for processing your bids, and contract payments with your bigger clients. You’ll be the first to know about potential payment delays, and more likely to get paid on time.

 

  • Make it easy: There are a lot of creative ways to make the payment process faster and easier. Use top notch invoicing software, or SaaS, to ensure your invoices are delivered electronically and on time. Work closely with new clients, especially bigger companies, which have slow-moving payment systems. Do your best to incorporate their payment needs into your system, but be sure that the conversation about the ways and means to pay on time takes place. Otherwise—you do not need this client.

 

Set up a merchant account, and take payment by electronic transfer or credit card. Be sure there is a clear understanding of delivery and payment terms to ensure you, and your customer, are free to build and expand a good business relationship—instead of spending frustrated days and weeks trying to get paid.

 

  • Retainers and upfront money: A lot of professionals ask for a retainer until they are sure a new client pays on time regularly. For substantial work for a new client, or with an established client with a poor payment record, get a percentage of your fee upfront. No small business owner can really afford poor paying clients. Entrepreneurs who carry unsuitable clients often end up out of business, or in bankruptcy.

 

  • But they aren’t paying: So you have a client that will not, or cannot pay. Talk to them in person. Make a visit if you can, instead of making a call. Get the lowdown on what it is going to take to get the bill paid—even at a discount. Offering any kind of payment incentive often greases the wheels enough to walk out the door with a check. Don’t do business with these kinds of companies. If it is your big client? It is time to diversify. Unless it is a big contract, legal action is an expensive option to pursue. Consider business mediation first. It is faster and cheaper.

 

Best tip? Develop and manage your client list into only premium customers. I have said it before, do not compete on market price. Compete for premium clients who pay the right price—on time. By offering special perks, attention, client care, and high quality service, you are developing the kind of customer who pays on time, every time. You do not want clients looking for a break on every bill. You want the ones who come to you because they know what to expect, and they are willing to pay for it.

 

From here on out? No more 90-day and up overdue, you just cannot afford it. Put the right structure in place, and start attracting the kind of customer that does not quibble about paying a fair price. When you need to market your services to the clients who pay—I hope you will call me at (585) 633-7563 for help. No small business owner can get rich on an IOU.

 

Yours in profit,

 

Bob Britton

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