How to Get Clients to Pay Invoices Promptly

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Make your payment policies clear at the time your services are retained. However yourbusiness is approved, whether it's by a client meeting, or by you submitting a bid, at some point, your client must agree to your estimated price for the work they want done. If your payment policies are stated clearly on your contract, bid, or whatever document you use to bind the contract, you are ahead of the game.

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Accept all forms of payment and encourage credit card payment. If possible, take credit cards. In this way, you are sure to be paid in timely fashion even if the client doesn't have the funds at the current moment. Shop for a merchant account provider and set up credit card processing for your business

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Get a deposit in advance. Unless you have a relationship of long standing with the client, get money in advance, and then plan to collect some more midway through the job. Usually, this is 30/30/40 - 30% in advance (to bind you, and to enable you to purchase materials), 30% upon completion of some agreed-upon benchmark, such as delivery of comps (rough sketches, if you are an artist, or small printouts if you make signs or do other design type work, etc), and the balance upon completion. By the way, make sure it's clear that "completion" means on the day you deliver it - not whenever they feel like it.

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Always let the customer pay when they offer. One of the dumbest things business owners do is shoot themselves in the foot by not accepting a check when it's offered. Many times, a client will ask, "Do you need a check now?" and the business owner says, "No, that's okay, we'll get it at the end." Don't do this! If the customer is happy to pay up front -let him!

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Make arrangements for payment before you deliver the final product. Hold back enough so that they will need to pay you before you deliver the finished job. It is notunprofessional for you to do so, though many business owners consider this a "low-rent" practice. It's not low-rent - it does not telegraph to your clients that you cannot afford to await payment - it lets them know that you are a professional accustomed to being paid for your work in a timely manner. Just say something like, "Hey, Mr. Jones, I have your job all ready to deliver. Can you have a check ready for me if I swing by around 3 PM?. The balance due is $470.78."

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Follow up every day until you receive your money. Obviously, you should try to get paid before this need arises. However, sometimes, you have a lapse in judgment, or you're lulled into a sense of security by a client you've had no problems with in the past. The thing is, once your client realizes your payment policies are lax, s/he will opportunistically attempt to exploit it every time. And remember - every minute that you are working to get paid is a minute that (A) you are working a second time for money you've already earned and (B) you are not working on a new job, which still needs to be finished on time, and you're running that job later by the minute.

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Apply your payment policies to every single customer. Don't give your friend Joe's buddy a bye on this. If anything, treat friends of friends with even less trust than a stranger - they often attempt to take advantage of your cozy relationship with their brother, buddy, whatever. If this guy has not paid you by your due date, call him immediately and ask for payment. If you are put off till the next day, call again the very next morning.

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Contact the credit agencies. Printing a warning on the bottom of your invoices is fine, but if you fail to follow it up, you won't ever be taken seriously. Contact the credit agencies, Experian, TRW, etc., and report late-payers. If it's their first time, call the client first, and let them know that you're terribly sorry to do it, but unless you receive their payment before the 30 day deadline, you will have to report it to the credit agencies, thus damaging their credit. It's a powerful incentive to pay.