How and When to Get Paid from Clients
Tips for organizing your business so you get paid promptly from clients
If you’re reading this blog, you may have a client who is slow to pay (or not paying at all!) for work done on a project. This blog won’t tell you what to do with that client, but it will walk you through good processes to use for future clients. By the end of this blog, you should be in a better place to get paid from clients
How to Get Paid from Clients?
Here are some tips from us at IT Hands. To get paid for any projects you do for a client requires clear communication, documentation and motivation. Without these key principles, a client becomes confused, frustrated and has no legal requirement to pay for your services.
1) Make Paying Easy
Make a schedule with your client, and provide an easy way to pay. Quickbooks online uses the feature where clients can pay directly online. This makes paying simple. We use one of the two scenarios for scheduling payments with clients.
Scenario 1: Invoice the previous month’s hours by the end of the first week of a month.
Scenario 2: Some customers prefer to pay for a set resource or minimum number of hours. Here at IT Hands we bill upfront at the beginning of the month. In this case, they use or lose the hours they pay for. If they use more than the agreed number of hours, the extra is billed when we bill for the next month.
2) First-Time Customers
- Always layout your prices very transparently for a prospect to evaluate before they sign any contract. Don’t hide any fees. Be upfront with all costs.
- Once a deal is closed with a new client, require a signature on your legally-binding agreement. This seals the deal, giving you and the client a clear-cut documentation on each of your responsibilities.
- Require a deposit before beginning the project. Depending on the size of the project, the client could pay 25-50 percent for a small project OR pay 80-160 hours worth for a larger project that extends several months. Finally, don’t have a project startup meeting until the payment is made. Apply any initial deposit to the final invoice.
3) Motivate Your Team
Don’t pay commission to your salespeople until the invoice is paid. This is a major motivator for your team to encourage the client to make payments. If the client is not paying attention to the salesperson’s request for payment, then the president/co-founder will need to contact the customer, with the salesperson’s assistance, to collect the payment.
A Last Resort
Depending on the circumstances, if payment is being delayed, we’ll put a project on hold. This is a last resort. We don’t do this often, as it slows momentum. If a client is unresponsive, or unreachable, we will send bills to a collection agency.
In business, cash is essential. Your business will crash without money to support it. Having good processes in place will help you put most of your energy into serving your client with excellence. This starts with good documentation, clear expectations and an easy process to pay. Have more questions on how to get paid from clients? Contact us.
IT Hands has been providing quality, custom web development services for over a decade to web companies and ad agencies. We are an agile web development company taking advantage of a globally dispersed team to deliver excellent results. Over 350 clients have been thrilled by the consultation, competency, increased capacity and cost effectiveness that IT Hands brings to every project.