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We know invoicing can be pain point for small business owners, and that’s why we recently introduced an Invoicing feature to GoDaddy Online Bookkeeping. Now you can keep your invoices, income, expenses, taxes, and reports all in one place.
Next to taxes, collecting money is probably the second most stressful financial task a small business owner faces. With so many businesses facing cash flow crunches, it can take a long time to actually get paid, even after you’ve done a bang up job on the project. Never mind the fact you like to eat and pay rent just like the rest of humanity!
To help combat the slow paying blues, try the following tips. These are good practices to follow every single time with no exceptions so you can get the money you’re owed right when it’s owed to you.
1. Don’t Play Favorites
This can get you in trouble faster than anything else. Sometimes you get somebody who wants to pull a “card” to get a favor – “but I’m your brother-in-law!” or “remember when I mowed your lawn last month?” The fact of the matter, though, is you’re running a business, even if some people don’t quite treat it as such.
Playing favorites and giving favors leads you down a path you really don’t want to walk. Once word gets around you’re a softie, soon everyone comes out of the woodwork demanding a deal. Or, worse, they’ll give you the runaround when it comes time to pay, and you won’t be in business for long.
2. Down Payments
We mentioned some companies don’t feel that moral obligation to do the right thing and pay up when it’s time. This is because they just see you as some person doing work. After all, you’re not a business, right?
Of course you’re a business, and a down payment can prove that to them. They’re going to be more likely to pay on time when they’ve already invested some money into the project. Later, once you build a trusting business relationship, you can lower the down payment amount required, or even get rid of it altogether.
Another way to make sure companies take you seriously is by demanding a contract every time, for every job. Be as detailed as possible so there’s no confusion on either end. Nail down whaty you’ll do, your expectations from the client, and payment terms and due dates so there is no confusion.
4. Be Prompt
Be on time…with everything. Every email, phone call, and project deadline should be right on time. The more professional you are, the more likely the client will return the favor and send you the money you’re owed before you have to contact them. This is also why being specific in your contract is so vital, as having firm dates helps everyone be prompt.
5. Following Up
Following up is always difficult, especially if you’re nervous about driving the client further away so you never get paid. However, if they’re in breach of contract, there’s no sense in waiting around in hopes they have a change of heart.
However, yelling at them probably won’t do any good (at least at first). Some busy business owners simply forget to follow up, though. Try sending an email or making a call once an invoice becomes overdue, and increasing the frequency of the contact until the invoice is paid. The squeaky wheel (or, in this instance, contractor) gets the grease.