Getting paid is always a pain point in services businesses and there’s no quick and easy solution, but I have managed to figure out why some businesses are better than others at making sure they get paid. My bookkeeper at Cerebra used to say “the squeaky wheel gets the payment”, and she was right. The more often she spoke to our client’s accounts departments and asked and chased and reminded, the more regularly we got paid.
There were times when clients would phone me to say that my bookkeeper was being irritating and I would apologize to the client and immediately give my bookkeeper a high-five, because if she wasn’t all over them we wouldn’t get paid. I’ve combined what I learned at Cerebra with what I’ve seen work in other services businesses and created eight steps to getting paid:
Step 1: phone all current clients and get these two pieces of information:
- The name, email, and telephone number for their Financial Director
- The name, email, and telephone number for their finance clerk (if different)
When you win a new client, collect the above information during the onboarding phase and develop a detailed and written documented understanding of each client’s finance systems and requirements. Their use of Purchase Order numbers, requirements for quotes before invoices, only paying once you provide a statement. There are any number of specific systems (hoops) you have to follow. Do not guess. Know and be perfect.
Step 2: find out the payment schedules for each client including:
- Which dates each month they load invoices
- Which dates each month they make payments
Step 3: correlate your invoice dates with the client’s payment dates
If your client’s payment terms are 30 days and they run payments on the 28th of the month, any of your invoices dated the 28th or later will take two months to get paid. If the client processes payment on the 28th, make sure you invoice them before the 28th to ensure the 30-day term passes before their payment run.
Step 4: specify the payment run with your invoice
Finance teams aren’t always up to speed on your contracted payment terms. When you submit an invoice, take that opportunity to remind the client of the terms and specify which of their payment runs the invoice must be included in.
Step 5: phone or email to get confirmation
Prior to each of the client’s invoice loading dates, phone or email the finance clerk to get confirmation that your invoice will be loaded. This happens BEFORE the invoice becomes late. Phoning after the payment run often means you have to wait until their next run.
Step 6: escalate if you have to
Any time an invoice goes unpaid on the due payment date, phone the Financial Director to get an explanation and chase for payment. If it’s a sizeable amount, request a specific payment instead of waiting for the next payment run. If you completed step 5 then you are well within your rights to make this phone call.
Step 7: solve disputes urgently
Any invoice that is disputed must be immediately discussed with the Financial Director and client contact person to resolve. Both the client and Financial Director need to know the potential consequences (interest, held back work, etc) when payments are not made.
Send a “thank you for timeous payment” to the payment clerk after each timeous payment. The person who loads and processes your payment is your best friend and if you’re going to be a pain in their side before you get paid, be a pleasure after you get paid.
Getting paid is your responsibility. Even great clients can quickly become accustomed to paying late and cash flow constraints kill businesses. It’s not enough to do the work and send the invoice, you have to make sure you get paid.