What happens when you don’t get paid? Working for yourself is fantastic because you are your own boss, you do work that you enjoy, and your earning potential is limitless. But that’s the catch – it’s potentially limitless. The reality is that sometimes clients pay late or don’t pay at all, and your cash flow suffers and your income is stunted. One of the few things small business owners DO miss about working for someone else is the regular bi-monthly paycheck.
Tracking down payments can be awkward, embarrassing, and no fun. But if you let invoices go unpaid, clients will learn that they don’t need to pay you. In essence, you are working for free – and that means the work you do is worth nothing. That’s a terrible message to send to clients. It’s absolutely critical, especially in the first years of your business, to relentlessly follow up on unpaid invoices. An effective deterrent to late payment is charging a late fee.
The first thing you must do is to make sure all your invoices state clearly that you will charge a late fee if payment is not sent on time. For existing clients who have not seen these notices before, you may send them a courtesy email alerting them to this change. Remember, you can’t charge a late fee on an invoice that does not contain this notice.
When a client is late in paying an invoice containing the late fee warning, you then simply send the next invoice including a late fee. For every month the invoice is late, you tack on incremental fees. You can safely charge up to ten percent (annually) of the total invoice and stay within the bounds of state and federal laws.
If this type of business followup is not your cup of tea, or if you don’t have time to do it, you can pass it on to a Virtual Assistant. A tenacious VA will not let any invoice go unpaid, clients will respect and value your hard work, and any kinks in your cash flow will be minimized.
Letting your VA track down delinquent payments not only brings you peace of mind but also saves you time. You’d be surprised by how much you can accomplish when a professional assistant is the one spending time ensuring payments come in the door.
If you’re sick of hounding your clients for payment, let a pro handle it for you. Contact me today, and we’ll talk about how I can help get your hard-earned money where it belongs – in your hands!