How to get paid on time.
One of the most frustrating parts of owning a business is that you can't guarantee getting paid by your clients on time. When it comes to chasing people for money owed to your business, prevention is far better than cure. Setting up clear rules and systems in the beginning is the best way to prevent any problems down the track.
Create efficient systems
This is the first and most important rule. Without an organised system for invoicing customers and for following up on unpaid ones, a business is heading for debt collection problems. For larger jobs, it could be a good idea to do a credit check beforehand to make sure you're going to get paid at the end of the job. You can take the simple approach and ask your client for names of those they've done business with previously to see that they got paid on time or the best practice is to contact a professional credit agency – check out Centrix.
It's time to quote
Always kick off with a quote or estimate because when your clients accepts, and they will usually have fewer questions when it receiving the invoice. If the quote needs to change, make sure you get agreement from the client as you go so there are no surprises.
Be quick at invoicing
Clients will not pay until they have been invoiced, because the invoice provides a record of the transaction. The sooner you invoice customers, the sooner you can get paid. Use email if you can and make sure the invoice looks professional.
Follow up swiftly
The longer you leave an unpaid invoice, the less likely your chances of getting paid. Once you have created an efficient invoicing system, don't ruin it by not following up overdue invoices straight away.
Offer reward for early payment
Offer a discount on invoices if they are paid within 5 or 10 days of being issued. While this means you will be taking a cut, sometimes it's worth it just to have money coming in on time. Experiment with offering the discount and see if it improves cash flow.
Give them a reason not to pay late
Charge a late fee for invoices that are paid past their due date. Once your clients realise how serious you are about due dates for your invoices, you may quickly see fewer late payments.
Make it easy to pay
Offer your customers professional payment options, such as PayPal, or set up a payments system on your website so they can easily pay online.
As the owner of your business, you may be in close contact with your clients, and you're probably the one sending the invoices and reminders. Even if you consider yourself friendly with your clients, be strict about payments. After all, this is business, and your business has to make money to survive.
IRD have changed their policy on when payments will be considered to have been received on time. Payments made by post are now treated as made on the day Inland Revenue receives them; the date of posting is irrelevant. It's therefore up to you to make sure you post your cheques in good time to reach IRD on time. There's no guarantee that a payment posted on the 18th will reach Inland Revenue by the 20th.
If you're sending a post-dated cheque, Inland Revenue will not bank it until the date specified. So even though it's physically received before the due date, it will still be treated as received late if the specified date is after the due date. You can also make payments in person, either at an Inland Revenue office or at a Westpac branch (note Westpac no longer accept cheques for tax payments) as long as you do so before close of business on the due date. Now might be a good time to think about making your payments online, if you don't already.
The last few years have seen a new wave breaking in the marketing world. You may be aware of it under different labels, but 'inbound marketing' is an umbrella term for the change.
The bedrock of marketing was always outbound strategy: the print advertisement, the billboard, the commercial on TV or in the cinema (remember going out to the movies?). Market share used to be heavily influenced by how much you could afford to spend on advertising. So the companies most likely to succeed were those who could afford billboards and full page ads. Smaller competitors had to be a lot craftier, the quality of their products or services had to be outstanding and their appeal to niche markets was often their secret weapon.
Today's customers are much more proactive about seeking out products and services for themselves, empowered by their confidence online. If they want a plumber or a palm tree or a book on rare birds, they're more likely to begin their search on Google before they reach for the yellow pages or walk into a shop. They don't only search online. They compare prices and features. They look at product surveys and access customer reviews.
By the time they email, pick up the phone, or complete the online form on your website, they're more than likely well informed about you, your business and what you have to offer. And they're already inclined to buy your product or use your services. They're a prospect who's generated a lead for you and they've invited you to contact them. You don't have to cold call them. You 'warm call' them. Of course, it's up to you to delight them from there.
Businesses have been quick to recognise the need to connect with the new style of customers. They're making it easy for customers to find them with inbound marketing strategies. Inbound marketing outperforms outbound strategies and is cheaper.
An eConsultancy survey from 2012 found the cost of acquiring a new lead was $346 using outbound marketing strategies, yet only $135 using inbound strategies. So, while larger companies have been quick to spot the trend, many smaller businesses are finding inbound strategies well within their reach and their budget.
The message for your online strategy is: make it easy for customers to find you. Make it enticing to stay and play. Offer takeaways with sufficient value for web-surfers to be happy to exchange their contact details for your white paper or presentation or your podcast. Create opportunities to interact with potential customers so your web presence is less of a billboard and has more potential to personalise future contact.