Getting customers to pay on time is one of the biggest challenges for entrepreneurs as the economic recovery drags on. And when the problem persists too long, it can ultimately shut down your small business.
Dawn Fotopulos, small business consultant and founder of Bestsmallbizhelp.com, addressed this financial headache with business owners at the New York Times Small Business Summit this week in New York. Here are her best five tips for getting paid faster.
1. Send invoices ASAP. It is all too common for business owners to finish their work for a customer and neglect to submit a bill. "You can't believe how slow small business owners are at getting their invoices out," Fotopulos says. "And the truth is the client has no obligation until they receive the invoice."
2. Explain every single charge. Don't send your customer an invoice with only a dollar amount on it. Itemize everything the customer has bought or every service you provided and highlight any discounts given. For example, Fotopulos charges non-profits less for consulting services than she does for-profits. When she sends an invoice to a non-profit, she indicates what it would have cost at the for-profit rate. "When that client signs that check, they are excited to sign that check, they know exactly why they are signing that check and they know how much value they have received," she says.
3. Make deadlines crystal clear. Don't allow the opportunity for any confusion. You need to tell your client when he or she signs the initial contract how much time they have to pay you. Also, reiterate your policy on both the billing invoice and packing slip. "It needs to be there so there is no ambiguity as to when that bill should be paid," Fotopulos says.
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