Gig workers, independent contractors and small business owners often choose that lifestyle for freedom and flexibility.
However, with great freedom can come cash flow problems. “Often, it’s a communication problem more than anything,” said Duncan Barrigan, founder and CEO of Lunos. “People get awkward talking about money.”
But your billing processes doesn’t have to be difficult. “Focus on automating systems, building good habits around accounts receivable, and getting comfortable communicating with clients to shorten pay cycles and improve cash flow,” Barrigan said.
Small business service providers and anyone else who traded a steady paycheck for freedom and flexibility can follow these tips.
1. Invoice Immediately When You Finish a Project
Don’t wait until the end of the month or, worse, until a client asks to send an invoice. Instead, make it a habit to invoice upon delivery of a project.
“Even a two-day delay compounds into slower cash collection,” Barrigan said.
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2. Block an Hour Weekly To Send Invoices
Don’t forget to invoice clients who are on retainer or have projects billed in stages. These clients provide a steady income that can help your freelance business thrive.
“Hold a weekly ‘Accounts Receivable Power Hour.’ Send invoices, clear disputes and schedule the next reminder wave,” Barrigan said.
Statements should be sent separately from reminders, he added. “Statements provide visibility while reminders drive action,” he said.
3. Negotiate To Shorten Payment Terms
Some industries fall back on net-30 as standard pay terms for independent contractors. But it doesn’t have to be that way. Barrigan recommended standardizing shorter terms whenever possible.
“Move from default net-30 to net-7 or 14 for most clients,” he said, suggesting that you can offer early pay discounts or charge late fees for past-due invoices.
“If you’re a small business buying Google Ads, of course, Google is going to tell you how to pay and when to pay,” he said. “But in the case of companies that are a bit more evenly sized, two small business owners, it’s up for negotiation.”
4. Make It Easy for Clients To Pay You
Make it easy for your clients by accepting multiple forms of payment, including easy online payments. But you can also negotiate for your payment preferences by suggesting ACH direct deposit, credit cards or other payment forms. Understand that credit card payments might come with fees, but they might be the fastest way to get paid.
“You have to decide what you’re prioritizing and how much you want to push — how much power you’ve got in the relationship,” Barrigan said.
5. Push To Automate Payments
Automating payments can also help keep things on track.
People often put their personal bills, like mobile phone, subscriptions and credit cards, on autopay through their bank or the service provider. Suggesting they do the same for your invoices can save everyone time. If they prefer not to pay you automatically, you can automate the invoicing process so it takes one more thing off your plate.
6. Consistently Follow Up on Late Invoices
When clients fail to pay on time, it’s important to follow up consistently. “It sends a signal that you’re someone who expects to be paid,” Barrigan said.
Using accounting software that sends automatic reminders can help.
“There’s a lot of very human emotions, especially for small businesses,” Barrigan said. “Technology can create the right amount of closeness and distance at the same time so that it doesn’t have to feel quite so personally coming from you, the contractor or small business owner.”
7. Give Yourself Grace as You Establish Processes
If you’ve just started implementing processes and you’re still dealing with late payers, give it time.
“More than three-quarters (77%) of larger finance departments aren’t on top of their receivables, we’ve found,” Barrigan said.
If companies with personnel dedicated to accounts receivable don’t have it down to a science, you probably won’t transform this aspect of the business overnight, either. But ignoring it won’t make the problem go away.
“Being on top of it is the first step,” Barrigan said. “What is your receivables situation and what can you do about it?”
Invoicing software that can automate invoicing, reminders and even escalations — making it feel like more of a standard business transaction and less personal — can help business owners at any growth stage.
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This article originally appeared on GOBankingRates.com: 7 Ways for Gig Workers and Entrepreneurs To Get Paid Faster
