Elizabeth Fitzgerald is a freelance solicitor
at Fumbally Exchange, Dublin 2.
Here are some tips I’ve put together about getting paid. It’s useful for solos, freelancers and small businesses. Therefore, I hope it is useful for everyone in Fumbally Exchange!
First, I’ve included a checklist for those who don’t have time to read the rest.
Checklist for solos, freelancers and small businesses on how to get paid
- Send the invoice within 1 week of completion of work.
- Get rid of “payment is due on receipt” on your invoice.
- Spell out the due date on the invoice.
- Send invoices between 7-9 am/pm
- Say please and thank you on your invoice
- Make payment options easy
- Know the info your customer needs on the invoice
- Call (not email) immediately the invoice is overdue
- Think about charging for late payments.
Reasoning
Send the invoice within 1 week of completion of work.
This great article based on data collected about the users of Freeagent shows the correlation between “recency” of work done and payment time. Payments sent within 1 week of completion had an average payment time of 5 days. Doubling the time it took to invoice doubled the delay in payment (invoicing after 2 weeks meant the average payment time became 10 days).
Get rid of “payment is due on receipt” on your invoice.
According to Freshbooks (I’ve also seen this mentioned in other places), customers interpret “payment on receipt” as “payment whenever”.
Spell out the due date.
Don't say payment is due in 30 days. Say payment is due on 31 March. A date focuses the mind and is more likely to be paid on time. This data is also from Freshbooks.
Send invoices between 7-9 am/pm (in the timezone that it is being sent to).
Set up a “scheduled send” for the email if necessary. Invoices sent between the hours of seven and nine are paid, on average, 4 days faster according to Wave. Wave links this result to the commute to and from work. I think that an email in my inbox first thing in the morning is more likely to get noticed by me than one received it while I’m in the middle of doing something else.
Say please and thank you.
Being polite on your invoice can increase the number of invoices paid by 5% according to Freshbooks. Example: “Thank you; we really appreciate your business. Please note that payment is due on or before 5 February 2014.”
Make payment options easy.
Electronic invoices with “pay now” buttons leading to payment systems are paid 2 weeks faster than regular invoices according to Wave (a electronic invoice and payment system provider) and Openforum referencing Intuit’s research (Intuit is another electronic invoice and payment provider).
Know the info your customer needs on the invoice.
This is mostly advice from Turbineq. Know what information your customers need on their invoice. Know their approval process. Know who signs off on invoices. Make a note of these details and keep them with your customer information. Consult before issuing. Don't be in a situation where your customers have to chase you to pay you!
Call (not email) immediately the invoice is overdue.
Call the customer within the week (even the day after) the payment is overdue with a friendly reminder. Dun & Bradstreet give the advice not to come across as heavy-handed in this call. Non-payment may have been the honest mistake of what could turn out to be an excellent customer. Calling is much more effective than just re-sending invoices. Feel free to mention that, for their convenience, you will be re-sending the invoice after your phone call. Dun & Bradstreet also suggest agreeing a payment date and amount before ending the call.
Think about charging for late payments.
This is an interesting one (a totally unintentional pun). The Freshbooks research found that companies that charged interest on late payments were more likely to get their invoices paid but the invoices were paid much later than those that didn’t charge interest. Freshbooks advises putting interest terms on invoices where your business isn’t suffering cash-flow issues and where it is important to get paid for each piece of work. It is suggested that customers look at interest charges as a price to pay late, not as a penalty, so it may suit customers to delay payment for the pre-determined “price”. Think long and hard about whether to use this strategy.
Invoice promptly
Finally, all the above points can make a difference to your cash flow but, if you are only going to do one thing from the list, send those invoices out within one week of completing the work. Invoice when your customer still remembers that quality work you’ve done!
The above is general advice. It does not create a solicitor-client relationship. Please contact your legal advisor for advice with respect to your specific needs.