How to get paid faster without upsetting your clients

Sam McKeith

Whether you’re kicking off a startup or running a more established SME, hassling clients for cash is one of the most frustrating parts of the job.

Not only does it mean wasting time on phone calls and emails, but it can also put pressure on your cash flow, especially when you’re just starting out.

Thing is, it’s a tough problem to solve because there’s a fine line between pushing for payment, and ticking off what could be a valuable client.

Rajhev Rajkumar, general manager at Small Business First an online community for Australian small businesses, tells us how to walk the payments tightrope.

Communicate terms up front

Rajkumar says as a small business owner you should always be crystal clear from the get-go about when and how you expect to be paid.

“Invoice immediately with details clearly spelt out as a reminder,” he says.

“If a client is behind on a payment, follow it up quickly. It's never too early to chase them up.

“Also, make it as easy as possible to get paid, offer all payment options, set up electronic fund transfers. Consider discounts as an incentive for early payment but don't forget to work it into your pricing.”

"Make it as easy as possible to get paid."

Be polite and respectful

There’s no point getting nasty, because it’s not constructive and will only harm your chances of getting paid faster next time, Rajkumar says.

But that doesn’t mean you can’t be clear and firm with your client base.

“You need to demonstrate that money is a serious thing for your business. There's really no point in a great relationship if it means the business suffers,” he says.

“Don't be rude or offensive; don't make idle threats; don't change payment terms unless this has been discussed and agreed.”

“You need to demonstrate that money is a serious thing for your business."

Get precise

There’s also no point getting proactive on payment, when the issue is at your end.

Rajkumar says he often sees businesses that claim sluggish payments to be an issue, when they’re actually part of the problem.

“Make sure right after sending an invoice that all the correct and required details are there and in the right format. A big problem is also waiting 30 days to then find out you left something out, or it was not set out right, and has to be reissued,” he says.

“Confirm discussions of phone calls in writing and stick to the facts. You should have a well thought-out escalation process in mind as part of your credit policy so just follow that to the letter.”

There’s also no point getting proactive on payment, when the issue is at your end.

Don’t jump to conclusions

Balance Books managing director Sally Hams adds that it’s important to remember issues crop up in all businesses, so it can help to look at the issue from the payer’s side.

While some companies can be just slack when it comes to paying invoices, Hams says there are sometimes good reasons for slow payment.

“Treat the client with the respect a client deserves and try not to jump to conclusions,” she says.

“Sometimes it can be an innocent ‘dog ate the invoice’ moment, or maybe there was a death in the family, and for personal reasons the client had to take time out.”

Sam McKeith

Sam McKeith is Sydney-based media professional. He has contributed to many leading publications including The Huffington Post, The Australian Financial Review, The Australian and BRW Magazine. He was previously a senior reporter at the Australian Associated Press where he covered national affairs.

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