It’s the nightmare scenario every business owner or service provider wants to avoid: you’ve poured your precious time and resources into delivering a stellar piece of work, and now your client won’t pay. Your invoice has been ignored and your follow-up emails and calls have been fobbed off. You find yourself wondering whether you should just write the loss off and move on, or get your hands dirty chasing payment down at all costs.
The good news is that there are ways to make sure that you never end up in this kind of awkward – and potentially financially devastating – situation. With the right planning, processes, and infrastructure in place, you can avoid chasing payment from clients altogether.
Here’s how to expertly manage the payment discussion with clients to ensure you get paid on time:
1. Document your payment terms in your contract.
It’s always a good idea to get clients to sign a contract or service-level agreement (SLA), no matter how big or small the job. Use this opportunity to clearly lay out all expectations and responsibilities of both yourself and the client, including clear payment terms. This puts you in a strong position from the outset, as you’ll be able to refer your client back to the signed contract should any disputes arise later on.
2. Ensure that your client understands your payment terms.
Even if your payment terms are clearly laid out in a contract, it’s a good idea to discuss them with your clients early on. This way you can ensure that the client understands your terms and has verbally agreed to them. This is also a good opportunity for the client to bring up any potential problems with your payment terms and for you to come up with a customized contingency plan that works for both of you. Having a customized payment plan in place from the get-go, even if it’s a deviation from your usual requirements, is much better than finding yourself chasing payment down the line.
3. Set up payment milestones based on how your services are delivered.
Many professional service providers only invoice for a job right at the end, once all the work has been delivered. This is a risky way to collect payment, as you’re asking for a lump sum all at once. If your client is experiencing cash flow problems around the time you invoice, you might find yourself chasing payment.
Rather, reduce your risk by collecting payments in stages based on project milestones. For example, an architect can protect themselves by collecting payment for an initial concept sketch, then collecting payment for a sketched design, then collecting payment for council submission drawings, and so on, rather than invoicing a client for one large amount once the architectural plans have been completed.
4. Use technology to make the payment process as easy and as seamless as possible.
One of the best ways to avoid chasing payment is to make it as easy as possible for clients to pay you. If they need to search for your banking details on a badly designed invoice, then log into their internet banking portal, then type out a complicated payment reference, they’re going to put off paying you (even if just subconsciously).
Customers and clients today are used to buying products online in a quick, easy, and seamless fashion. They’re accustomed to having all the product details at their fingertips and they’re accustomed to payment being as simple and as instant as clicking a ‘checkout’ button.
Using the right e-commerce technology allows you to mimic this frictionless digital experience for your clients, no matter what kind of services you offer. With Morphed’s Customer Portal, you can create a digital proposal and send it directly to your client who can review and make an online payment when ready.
Or, they can submit a brief by logging in, clicking on “Submit A Brief” with the help of the digital briefing template. Once submitted you can turn the brief into a proposal. If you have a few unanswered questions relating to the brief, send your customer a message using the conversations box.
When they click “Accept Payment”, they are directed to make a secure Stripe payment.
[PRO TIP]: Setup automated payments according to milestones of the project/retainer.