Most small businesses fail within the first five years because of a loss in revenue. Small businesses lose money because they spend more than they make. But the main reason businesses lose revenue is because they have a long list of outstanding invoices.
New business owners like to advertise their new services by offering discounts. But when it is time for your clients to pay full price, then there’s an issue. It is hard to know exactly what to do when a client won’t pay. It’s important to have a plan in place, in case clients refuse to pay for your services.
No matter what, you should be getting paid for your services. If you have outstanding client invoices, it is time to settle those balances. This article will outline strategies that will help you collect payments for your rendered services.
How to Invoice Clients
All your clients should have a copy of your pay structure. This pay structure lists the prices for all of your products and services. It is best when you start your business to stick with the prices on your pay structure to avoid confusion.
Before you agree to deliver a product or service, send your client an invoice. Make sure that your client agrees to the terms of service. Search for an invoice template that best suits your needs.
Your invoice needs to include the type of service rendered and the total cost. The invoice should list all acceptable forms of payment. You decide how to charge your clients but make the payment process easy for them.
Collecting Payments
Your invoices need to have payment due dates. Follow up on your client invoices a few days before the due date. Treat this communication as a payment reminder.
Once the due date has passed, send a follow up communication that lists all the available payment options. If your client doesn’t respond to the payment options, ask them if they want to set up a payment plan. This usually gets your client to pay because no one wants to be perceived as poor.
If you are still unable to collect payment from your client, reach out to a pro bono freelance lawyer to see what your options are. The invoice and communication between you and the client serves as legal documentation. Inform your client that you will be taking legal action and, if applicable, discontinue services.
What to Do When a Client Won’t Pay
This article outlined some tips on what to do when a client won’t pay. There are many other strategies to help you close out those outstanding balances. Be proactive and create a plan in the event that your client refuses to pay for your services.
Stand firm on the price for your services and don’t allow the client to haggle with you. Research other ways to protect your business against potential financial losses. Revisit this article anytime you need guidance on how to handle collection issues.
