5 Tips to Help Small Businesses Get Paid On Time

Late payments can be catastrophic: In the U.S. more than 100,000 small businesses close down every year because of delayed invoices. For freelancers and microbusinesses, late payments can be even more painful.

To help entrepreneurs stay in business, the online small business accounting experts at FreshBooks shared their top five tips for getting invoices paid fast.

#1: WRITE CRYSTAL CLEAR CONTRACTS
Create a foundational contract template that includes explicitly states prices, terms for payment, terms for revisions and additional work, and a “kill” fee in case a project is canceled. Then, customize the cover page to describe your agreed-upon services.

#2: REQUIRE DEPOSITS
For significant projects or high-priced services, it’s fair to require a deposit at the onset — some businesses ask for 50% — to protect your cash flow.

#3: STICK TO AN INVOICING SCHEDULE
You won’t be paid on time if you don’t invoice on time. Choose a day — and stick to it — to invoice every month, both for completed work and for ongoing projects with milestone payments.

#4: AUTOMATE REMINDERS
Putting your late payment reminders on autopilot avoids awkward conversations and the fear of nagging.

#5: ENFORCE LATE FEES
Research shows interest rates incentive clients to pay on time, but be fair (less than 10% interest). Include the exact breakdown of late payment fees in your contract, and the updated balance in your reminders, so clients understand clearly what they owe.

Small Business