It's one of the most common frustrations for business owners of all kinds, but CHRIS STRODE has some tips to help builders get paid on time, every time.
Late paying clients are one of the biggest frustrations for Australian business owners in the construction industry. On average, half of all Australian small businesses report that 40 percent of their invoices are paid late.
Late payers have a detrimental effect on your business’ cash flow, causing not only unnecessary stress and worry but some serious financial concerns. Therefore, putting systems and processes in place to ensure you get paid on time should be a key priority. By taking the time to implement these, you will find your cash flow becomes more consistent and reliable, in turn helping your business run smoothly all year round. Here are some quick and simple tips to help you get paid fast.
Send an invoice immediately after the work is complete
For busy small business owners, it can be tempting to put off invoicing until the end of the day, or even the end of the month when they can complete it all at once. But this slows down the payment process, meaning you might not get paid until over a month after a job is complete. If you create and send an invoice immediately after a job is finished, however, your work is still fresh in the client’s mind. You can then move on to your next project with the peace of mind that you have invoiced for all completed work. Mobile invoicing apps allow you to create and send professional invoices from your mobile phone while still on the job. Sending a prompt invoice straight to your client’s email or mobile will not only help you get paid faster but shows you operate a punctual and professional business.
Offer multiple ways to pay
When you’ve sent an invoice, it’s important to make sure the payment process is as seamless as possible. One way to do this is by offering your clients a range of payment options, such as credit or debit card, eftpos or direct deposit. Accepting your clients’ preferred payment method makes your service as convenient as possible for them, meaning your invoices get settled faster.
Shorten your payment terms
Even if you submit invoices promptly after a job, some people simply have a habit of paying late. If this is a common problem for your business, consider reducing your payment terms from 30 days to, say, 15 days. When your clients see the deadline is soon it increases the likelihood of them paying on time and can save you valuable time chasing overdue payments down the track.
Follow up on overdue payments
Even with these systems in place, the reality is that some clients still won’t pay you on time. When this happens it’s important to follow up with a gentle reminder when payment is overdue. More often than not, settling the invoice will have simply slipped the client’s mind, so a polite nudge might just be the reminder they need.
From poor cash flow to unnecessary stress, late paying clients have many negative impacts on small business owners in construction. But by setting up a few straightforward processes, late payment can become more of an occasional inconvenience, than a monthly problem.
Article by Chris Strode, founder Invoice2Go
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