If you offer an in-demand service, you probably have little problem attracting new clients. Securing payment for the work you perform, though, may be an entirely different matter.
Clients fail to pay invoices on time for a variety of reasons. Regardless, if you do not have a steady flow of income, your business may not survive. Here are four common ways to ensure your clients pay.
1. Do some research
As a small business owner, you may think you must accept every client who walks through your doors. That is not the case, however. Provided you comply with applicable anti-discrimination laws, you can likely turn away prospective clients who may not pay. Researching your clients before accepting is probably wise.
2. Secure a deposit
If your business model requires ongoing work for a client, you may want to request a deposit before you begin work. Alternatively, you may demand payment at various stages of the project. Both approaches ensure you receive prompt payment for the work you complete. If your client stops paying, you can stop working without incurring additional expenses.
3. Use a written contract
While it is often possible to do business without a written contract, you probably want to have one. Not only do contracts set reasonable expectations, but they also give you a legal framework to follow if your clients refuse to pay. That is, if you must pursue legal action, your negotiated contract gives the judge a place to start.
4. Assess late fees
Many small business owners prefer not to charge late fees, as they believe doing so may jeopardize return business. Still, if your clients do not pay for your services, their return business does not do you much good. When assessing late fees, consider starting with small sums. This approach may serve as a gentle reminder of your outstanding invoice.
While charging late fees may help compensate you for the time you spend securing payment, it may also encourage your clients to pay outstanding balances. Nevertheless, with a comprehensive billing strategy, you boost your odds of receiving the payment you deserve for the services you have already rendered.