What do open invoices say about your business?
Brian Tracy once said, All business is people business.
That’s because businesses are built on relationships—whether you build those relationships online or offline.
But when your clients don’t pay, what does that say about the value they place on that relationship?
And when you let them not pay, what does that say about the value you place on your own business?
A client of mine was wrestling with this very issue. She had open invoices from a hedge fund for whom she had done executive search work. Couldn’t understand why.
I’ve worked with them before and they’ve been prompt with payment, she fretted. We got along really well. I don’t want to lose them as a client by coming across as a tyrant ….
You don’t have to be one, I replied. But there’s a big difference between being a friendly professional and being a professional friend.
Here are seven steps I shared with her to better professionalize her business … while still staying friendly:
- Start the relationship with a written agreement. Include penalties for lateness. Your clients should know up front that you charge interest or late fees if they don’t pay on time.
- Send invoices right away. Invoices get paid faster when the value of your work is still top of mind. Not six months later when you’re a distant memory. Better yet, bill in advance so you have the money up front.
- Use an “upcoming reminder” system. Why wait for 30 days to say anything? You can call or send a friendly reminder at Day 15, thanking them for their business and checking on their satisfaction with your product or service.
- Tackle receivables immediately. Once clients have passed your deadline without payment, get in touch. The sooner and more often you’re in front of them, the less they can ignore you.
- Enlist help. If collection calls are not your strong suit, have an assistant or friend/relative who acts in a professional manner make the calls.
- Consider alternative payment arrangements. Although credit card payments have processing fees, they can provide breathing room for clients who need a “float.” Or, consider a payment plan (don’t forget your interest charges). Or, discount early payments.
- Keep notes on the promises clients make. If a client promises “payment will be in the mail once the bookkeeper comes in next Friday,” send written confirmation to the client of what she promised to do. And check in the following Monday to confirm the amount of and the check number. The more details you have on record, the harder it is for clients to wiggle out of their previous promises. (And the better the paper trail you’ll have if you eventually need to sue).
If you’re ready to place a greater value on your business, email me.
We can help create a system that you’ll be able to implement easily, monitor consistently, and handle timely.