While running your own business can be rewarding on a variety of levels, it’s still all about the benjamins. Translation: you can’t be successful if you’re not getting paid. But sometimes you can shoot yourself in the foot when it comes to getting paid by making some rookie mistakes.
So how can you make sure your invoices get paid? You can start by avoiding these five mistakes...
Don’t Mess Up Your Invoice
This one seems obvious, doesn’t it? But minor mistakes are often the number one reason your invoice hasn’t been paid. Carefully proofread each invoice to be sure it is correct. If you forget to change an older invoice number, for instance, your client will likely enter it into their payment system and get a message that it has already been paid and your invoice ends up in the recycling bucket. Your invoices need to include a unique invoice number, an accurate date, and a detailed account of what is being charged. You also want to make sure you set invoice payment terms that are both useful to you and your cash flow and also fair to your customer or client.
Don’t Expect Immediate Pay
Sure, rent is due and you’re feeling the pinch. But that won’t make your invoices get paid. Do you pay your bills the day you get them? Most businesses don’t. Expect your clients to take the full payment term. If the project is very large and high cost, it can take even longer as those invoices might need multiple layers of approval before they can be processed. When you build your company budget, include leeway for invoice payment, beyond the terms. It's just the way it usually goes. Lastly, be sure to include a due date on your invoice in addition to the terms (i.e., include "Due May 7, 2015" as well as "Net 30"). Many businesses file by due date, and this will help your invoice get paid more promptly. This doesn’t mean you shouldn’t follow up on the slow payers when needed, of course.
Don’t Forget to Actually Invoice
In the early days of running your own business it’s likely you’ll never forget to invoice. But as your business grows, invoicing can fall through the cracks—especially if you're still doing the bookkeeping in addition to the actual work. When you submit the final portion of a project, you also need to submit an invoice. If you are working on a long-term project with period billing, you need to be sure you invoice at the right times. If you delay sending an invoice you run the risk of the client being confused about the billing and either ignoring the invoice or assuming it must have already been paid and you’ve sent it in error. Using an accounting system (such as a certain sweet online accounting software *looks at self*) can help you avoid this costly error.
Don’t Cause Sticker Shock
As a project is fully in swing it can be all too easy to hunker down and just do the work as asked, even when the project has grown beyond the original scope of the contract. The client will be thrilled—right up until the moment they open your invoice. If your invoice is larger than your initial agreement, your client will be understandably upset. During the process of the project you need to be very, very clear about how increased work=increased charges. Be sure to notify the client both verbally and in writing, with updates to the contract or statements of work as needed. Ending up in a lengthy dispute about fees with a client is a sure way to guarantee slow payment of invoices. Open, transparent communication is key here.
Don’t Be Unprofessional
When you work in an office you can get pretty chummy with office mates. However, those office friends aren’t usually the people signing your paychecks. It can be all too easy too easy to be casual in your relationships with your clients, but trust us when we tell you this is a mistake. While you want to be friendly with clients, you always have to remember: they are clients before friends. Maintaining that professional relationship will keep expectations aligned and help you get paid faster.
These five tips might be just the beginning, but we promise: if you avoid these mistakes you’ll have better business relationships and get your invoices paid faster. Always remember that being a business owner means acting like, well, a business owner.