Ways to cope with slow paying clients

As an entrepreneur, it’s your job to take care of your customers and clients to the best of your ability, which can be difficult if they aren’t paying you on time. While you may be tempted to withhold services until payment arrives, that could damage your relationship with the client and cut into your profits in the long run. To avoid these problems, check out these tips on how to cope with slow paying clients.  

1) Get Paid Before Doing Work 

First of all, even if your client does pay on time, expect delays from time to time. Most entrepreneurs have no problem paying their bills on time each month, but when it comes to paying freelancers or other service providers, that’s a different story. It can be tempting to let delayed payments slide until they fall through the cracks and don’t get paid at all. Unfortunately, that only puts you in a position where you must either write off your earnings as bad debt or chase down late payments—which takes more of your valuable time away from work that you could be spending getting new business or increasing sales.

To help cope with slow-paying clients, look for good ways to manage cashflow before you start working for a particular company. Ideally, don’t start any project without getting some sort of payment up front: via check, PayPal or something else that will ensure your compensation right away (for example, an exchange of assets such as an initial design concept). You might also consider requiring partial payment upfront based on key milestones (e.g., after proofreading has been completed).

This way you stand a better chance at getting paid quickly while still doing high-quality work every step along the way. Remember: in order to make sure cash flow is smooth throughout your career as an entrepreneur, you need predictable income streams that allow for early access to funds when needed most. 

2) Set Payment Deadlines

In order to get your hard-earned money on time, make sure you set a payment deadline. This way, clients know when they need to pay their bills—and when they might face fees for late payments. It’s also a good idea to set up automatic invoicing and reminders that give your clients extra time. Not only will these measures help you recover late payments, but they can also encourage clients who are about to miss their deadline—and may be willing pay earlier than expected in order avoid penalties. Most of all, don’t be afraid to hold back final work or products until you receive payment (the best method is using milestones). Getting paid upfront could motivate clients to want more work done sooner rather than later.  

3) Use Reminder Letters 

Reminder letters can be a great tool for pushing cash-strapped clients to pay you on time. As soon as you realize a client hasn’t paid you, send them a polite email or letter reminding them they owe you. Make sure your tone is professional and not accusatory, but that it lets your client know you won’t let their tardiness slide. Additionally, explain how they can make faster payments in future—for example by setting up an auto payment system through their bank.

4) Outsource Client Collection 

Many entrepreneurs make a mistake by trying to chase down slow-paying clients themselves. Sure, it’s easy enough to email a client and ask for their payment, but there are plenty of options that can streamline collection efforts and save you time (and headaches). One increasingly popular option is hiring a virtual assistant (VA) or outsourcing your collections department entirely.

VA services have come a long way over recent years—especially in terms of online reputation—so they can be an incredibly reliable source when chasing debts down. If you haven’t considered using one before, get started now; chances are there will be something on our list below that suits your needs perfectly.  

5) Know When to Cut Ties 

When a client won’t pay you, it can be tempting to continue working for them for free. This isn’t always a good idea. If your client is late or pays you less than expected, ask politely if they intend on paying for your services. If not, thank them for using your service and let them know that you will no longer be helping them until they resolve their situation. You are likely working too hard for little return, so set boundaries and stick to them.

Of course, if clients don’t want to pay for your services now—and haven’t been upfront about their payment expectations—it may be time to cut ties anyway (whether you should stop work immediately or give notice depends on how far along you are in a project).  

6) Try Escalating the Matter 

If your client is running late on a payment, reach out and offer to meet in person. It can be tempting to put off talking about money until you're starting to panic, but that's never a good idea. Most people love a proactive approach, and they'll likely appreciate hearing from you directly rather than getting hounded by emails or phone calls. If possible, have hard numbers in mind (such as estimates for how many hours or days of work are involved) so you can explain what has happened without appearing too pushy.  

Finally, remember that it’s OK to ask for reasonable concessions when cashflow slows. A short extension may not cut it—consider offering reduced rates instead (or in exchange for an up-front payment). Most clients will understand if you need more time upfront in order to finish their project. 

Let Omnia help you keep abreast of your cash flow 

Many business owners find themselves drowning in a sea of invoices and have no idea how to keep track of everything. This often leads to missed payments, late fees, and a nightmarish mountain of paperwork that feels impossible to climb. A virtual assistant can help here. Omnia Virtual Business Service  offers  assistance in managing your bookkeeping so you never have another hiccup when it comes time for payment. . . .