Beat invoice anxiety

• De Darren Fell, Crunch
• 12 oct 2011

Freelancing is great – but you need to get paid! Collecting your fee can be an uphill battle, but with a bit of planning and determination, you can make your payday hassle free.

Invoice straight away

As soon as your project is done, fire off that invoice! Don't wait until tomorrow, don’t wait until after the weekend, invoice straight away. You'll undoubtedly be having an email conversation going with the client as your job is finishing, just attach it to an email with a casual "Oh, my invoice is attached by the way."

This way, your client will get the invoice while your work is still front and centre of their brain. They'll be far more likely to process it straight away than if you wait a few days - by which time they'll have probably moved onto a new task.

Some people - freelancers included - can get skittish when talking about money, which can leave them procrastinating for days about when the best time to invoice is. The important thing to remember is that you earned that money and it is your client's legal obligation to pay you.

How long until you get paid?

If your invoice isn't paid straight away, don't worry. According to a recent survey, the average payment period for small businesses is 52 days. Most organisations - especially large corporations - will have a bureaucratic chain the length of the Great Wall of China your invoice must pass through before it is finally paid.

It's important to remember that late payments aren't uncommon. Not being paid on time is an inconvenience, but just because your payment is a few days overdue it doesn't mean your client is trying to screw you - most likely your paperwork got lost behind a desk or their bookkeeper has the flu. Keep a cool head and you'll be fine.

The follow up email

A good practice is to send a follow-up email a few days after you send your invoice to make sure it was received. You should also send a reminder half way into the payment period - if your payment terms say an invoice must be settled within 28 days, send a gentle reminder after two weeks.

If the end of your payment period is approaching and there's still no sign of your invoice, it’s time to send a slightly less-gentle email. Make sure your client knows their time is running out, and inform them of any late-payment penalties they may be subject to (if you included them in your original contract).

If worst comes to worst?

If it's been weeks without any contact from your client and your bank account is still bare, it could be time to take some more serious action. Send your client a letter warning of more severe action if payment is not forthcoming.

If your demands go unanswered, you have two options. Firstly, you can issue legal proceedings, or secondly you can give the case to a reputable debt recovery agency. Both of these options will result in additional expenditure on your part - but some additional expenditure is worthwhile in order to recover your hard-earned money.

Crunch are expert online accountants specifically for freelancers, contractors and small businesses.

Escrito el:

12 oct 2011

Categorías:

Setting up a Business, Contabilidad, Best Practice