Eight Ways To Get Paid Faster

Paul B. Brown, 

 I was expecting solid—but predictable—ideas when I asked you to comment about various ways to collect accounts receivable sooner.

You know:

1. Bill as early as possible. Don’t wait until the project is done, to send out an invoice for the full amount. Stage payments. You know: 25% is due when a quarter of the work is done; 50% at the half way point, etc.
2. Offer discounts: “If you pay within 10 days, we will knock 5% off the bill.”
3. Take advantage of whatever terms your customers offer.  If they offer to pay you on the 31^st day by wire transfer, in exchange for paying 2% less, say yes.
4. Don’t waste your time trying to get huge companies to change their payment terms. If MegaGalatic Inc.’s policy is to pay Ford in 45 days, they are not going to make an exception for you. 
5. Stay on top of things.  If someone is expected to pay within 15 days, make a call on day 18, if they haven’t.

In short, make accounts receivable a priority.

As I said, I expected these things—and they are all good ideas—but there were a couple I never heard of before.

    6.   The first came from M. Firdaus who basically said that what we were talking about here is a cash flow issue. And he wonders if there are there products offered by others you could add to your line, to get more revenue coming in.

    7.     But my favorite idea came from OstrichCanada Simply have all your customers pay in advance.  Doesn’t this scare off potential clients. They say no. As they wrote me: “Do think Accenture, Deloitte, etc. care that they’re too expensive for many small businesses? The answer’s likely a “no” because those aren’t the clients that they’re looking for. Not that we’re in the same league as them, but it’s the same principle for us: Our approach narrows down prospective clients to those who can afford to commit to using our services. Even if it decreases our revenue (which would be debatable), it makes a lot more sense to us.”

What has worked for me, personally? 

     8. I always make accounts receivable personal for the person on the other side of the desk. I am quick to mention to clients that I have four kids to put through college and the various bursars I am supporting have no sense of humor when I tell them “my client promises to pay me any day and that’s when I will pay you.” Since most people can relate to the challenge of paying tuition bills, my invoices tends to be moved to the top of the pile.

 Okay, for next time: The topic is when (if ever) do you say no to taking on work? Are their some clients who are just too difficult? Can you ever afford to say no? Does there need to be a hard and fast rule or does cash flow dictate.  Let me know by clicking the comment button now.

 Paul B. Brown is the co-author (along with Leonard A. Schlesinger and Charles F. Kiefer) of Just Start: Take Action; Embrace Uncertainty and Create the Future recently published by Harvard Business Review Press.