You’ve built a successful service business and have great clients, but you’re still struggling with inconsistent cash flow. Waiting around for clients to pay you weeks or months after you’ve delivered your services is causing problems for your business growth. The solution is to set up a solid payment policy.
If you want to get paid faster and avoid awkward conversations chasing down payments, you need to establish clear payment terms and procedures. By combining that with tools like invoicing software, online credit card processing, and client portals that make payments easier for your customers, you can get paid quickly and cure your cash flow woes.
Read on to learn how a comprehensive payment policy can transform your business.
What is a payment policy and why does your business need one?
A payment policy outlines when and how clients are expected to pay for your services. When you have a clear payment policy in place, your customers know when payment is expected and can prepare to have the funds available at the right time.
Implementing a payment policy provides several benefits for your business. First, it gives clients a structured process which simplifies their experience, thereby building loyalty. Most importantly, a payment policy gets you paid faster. Specifying payment terms upfront, like requiring a deposit before starting a project or payment within 15 days of invoicing, helps avoid confusion and prevents late or missed payments. A payment policy also allows you to plan your expenses, since you know when your income will arrive.
What to include in an effective payment policy for service businesses
Clearly state your payment terms upfront
Set expectations right from the beginning by specifying issues like when invoices will be sent, when payment is due, and which payment methods are accepted. Consider questions like:
- Will you send your invoice immediately after completing the work, or within 14 days?
- Do customers have to pay within 7 days or 14 days of receipt of the invoice?
- Do you accept online payments or only checks?
Be transparent so clients know what to expect.
Offer convenient payment options
The more payment methods you accept, the easier you make it for clients to pay you, and that increases the likelihood that you’ll get paid on time. In addition to checks, consider implementing online payment processing so that you can accept credit cards and eCheck/ACH payments.
Solutions like vcita offer simple credit card processing and client portals, so customers can pay instantly online. You might also want to offer affordable payment plans or financing for larger projects.
Send invoices promptly and follow up consistently
Email invoices as soon as the work is complete, and send payment reminders as the due date approaches. Use invoicing software to automatically generate invoices so there’s no reason for delays in invoicing, and to schedule automatic reminders. The faster you invoice, the sooner you get paid, while consistent follow up reduces the chance of nonpayment.
Be willing to negotiate when needed
While you want to get paid on time, sometimes good clients can hit financial issues. Rather than damaging the relationship, think about working with them on an extended payment plan. However, do put any new terms in writing, to avoid confusion later on.
How to use invoicing and credit card processing software to reinforce your payment policy
Once you have a solid payment policy in place, you’ll want to implement it efficiently. Online invoicing software and credit card processing services make it easy to bill clients, get paid fast, and keep track of your business income.
Online invoicing software allows you to create and email professional invoices to clients right from your computer or mobile device. You can customize invoices with your business logo and color scheme so they match your brand. The software automatically pulls information like client details, hours worked, and pricing from your records to fill in the invoice accurately and quickly.
Invoicing tools also record when invoices are viewed, paid, or overdue, so you know who owes what and when payment is expected. Many services integrate with accounting software like Quickbooks to automatically track sales and revenue and remove stress from bookkeeping.
Accept credit card payments
Give clients flexible payment options by accepting major credit cards like Visa, Mastercard, American Express and Discover. An online credit card processor securely processes payments and deposits funds directly into your bank account, speeding up payments and ensuring you have a clear record trail.
Some processors offer card readers you can plug into your smartphone or tablet to swipe cards in person. Others generate payment links you can email to clients or embed on your website.
Offer a client portal
When you offer a client portal to your customers, you allow them to log in, view a history of their invoices, make credit card payments and check payment status 24/7. This convenience encourages faster payments and a better overall experience for your clients. Many invoicing services and credit card processors offer portals you can easily set up and customize with your own branding.
A payment policy is key to financial stability
Getting paid on time is important for any business. When payments are flowing in regularly, you’ll gain valuable insight into your business’s financial health and have greater confidence to take on new clients or explore other growth opportunities. Establish a transparent payment policy to set expectations, simplify transactions, and ensure steady cash flow, and support it with the right tools and technology to streamline invoicing and collections processes, so you can focus on growing your business.