How To Get Paid Faster While Strengthening Client Relationships

When I ran my first company, I thought it was normal to wait 30, 60, even 90 days, to get paid.

We’d deliver work on time. Send the invoice. Then… nothing. Just silence. Some clients paid on time and some were just not as consistent. 

I ended up spending a lot of time chasing payments, through my contact person at their finance department. The invoice would have gotten stuck because of the wrong project number or because the right person at Finance was on vacation.

We never considered that this was the reason we couldn’t grow. Looking back, I realized that we were acting like a bank to our clients, and we were doing it for free.

Long payment terms have long-term impact

‍Accepting long payment terms might be the only way to get a client to sign sometimes, but it shouldn’t have to be. Because you’re aawaiting for payments that are supposed to pay your team’s salaries, your freelancers and your design/software tools.

Perhaps even worse, long payment terms often create uncertainty. You start making decisions based on unpaid invoices, and suddenly you’re postponing that investment in hiring someone new, getting better tools or taking on bigger contracts.

What can you do?

‍You shouldn’t need to chase invoices. There are many solutions to this problem, and I would try solving them in this order.
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• Upfront payments: In the negotiation, try to get the client to agree to paying part of the invoice before the work starts. This can also help filter out clients that might not pay on time earlier. If they’re not willing to front 10-30% of the total cost, perhaps they will drag payments later as well. Clients might see this as a way to build trust, which will enable you to focus on the work, and not the payment.
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• Break up payments: One big invoice at the end of a project can strain your client’s cash flow just as much as waiting for payment strains yours. By offering to break down a large invoice and instead invoice in installments might even be a win-win.
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• Send invoices early: Some clients wait for invoices to send their own. Others need them for monthly or quarterly budgeting. By sending an invoice as soon as possible, you will help your client keep track of their spending and let them invoice their clients sooner.
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• Early payment incentives: Offer 1-3% discounts for payment in 5-10 days (vs. 30-90 days). Giving clients a small discount if they pay early is a great offer of flexible terms. If they have the cash, they save money, and you get paid sooner. Everyone wins.