Working for yourself can bring you unrivalled amounts of freedom that being employed simply won’t give you. However, on the other side of the coin there are also challenges that you will have to learn to deal with that you may never had had to tackle in the past. One of these challenges is actually getting paid on time by your clients. If you’re running a new business and have recently gone it alone, then getting paid on time will be a crucial element to keeping your business alive. This particular problem catches many small business owners out, but there are certain things you can do to avoid this happening to you.
As with anything else, prevention is ten times more effective than a cure. What I mean by this is that you should try and focus on not ending up in the position where people owe you money, rather than spending your precious time chasing invoices. Of course, late payments are inevitable but if you can limit the risk of this happening, your new business will be a lot stronger and secure.
From experience, the first initial conversation with a potential client is often sets the tone for your future working relationship. It’s absolutely crucial to get these initial discussions right, as a lot can go wrong from missing out important details. It’s at this point when you should start to make any prospective client aware of your consulting payment terms. This doesn’t mean forcing legal documents down someone’s throat, but you should be making them aware of when you will be invoicing, and when you expect to be paid. This will go a long way to avoiding any confusion over payments as your relationship develops.
When you’re running your own business, it can be very easy to slip behind on the administration tasks like invoicing and recording them in a proper accounting system. Don’t forget that if you don’t invoice, you won’t get paid! It’s well worth spending a set amount of time each week to keep on top of these crucial tasks. Another great tip for getting paid on time is to invoice promptly. If you leave it too late, you might give off a relaxed impression that says you’re not too bothered about timely payments. Give your clients an efficient impression by invoicing early.
Quite often, payments are made late through to people innocently forgetting. In this situation it would be crazy to go in all guns blazing, when in reality a simple reminder phone call can resolve the situation immediately. Part of this is being able to read the situation and understand what the appropriate course of action is. Yes, there are times for legal action but you’ll probably find that 90% of late payments can be resolved with a friendly reminder. The worst thing you could do is lose a valuable client by going in too heavy.
Firm but Fair
If you’ve done everything correctly and your client knows your payment terms, you have every right to require timely payments. If you were going to take one mantra away from this, then it would have to be acting in a ‘firm but fair’ manner. You should never be aggressive or start unnecessary arguments, try to act professionally at all times. As frustrating as it can be, never forget that your reputation is on the line and word can spread pretty quickly.
As a very last resort, you may eventually have to resort to legal action. If this happens to be the case then you should ensure that you do everything by the book. It’s well worth seeking out advice before you do anything, to double check that this is indeed the best course of action to take. Legal action can be very expensive, stressful and drain a lot of resources that could be used to push the business forwards.
About the Author: Jon Quinton currently works for Wish.co.uk in the competitive sector of experience days and gifts. If your consulting business is stressing you out, why not take a look at what they have to offer!