How often do you waste your time chasing payments from delinquent client accounts? Are you getting ulcers just thinking about the unpaid invoices you have piling up? And the many emails and phone calls you have to make just to get paid for work that’s already been delivered? Or, perhaps, it’s time to pay your client a physical visit, which only means wasting your time in traffic and waiting for them at their place of work as they play delaying tactics with you. 

Besides the emotional toil this has, it also affects your business immensely. You have suppliers and employees to pay and other business expenses to meet. Any delays in payments from your clients will certainly affect your cash flow. That’s why it’s important to take the necessary steps to ensure prompt payments from your clients. 

Timely payments enhance your business’s liquidity, enabling you to meet operational expenses, invest in growth initiatives, and weather unforeseen challenges. In this article, I will share some of the key tips to get paid faster this year. 

Tips to Get Paid Faster as a Consultant and Small Business Owner

Here are tips to get paid faster this year to help you ensure your business maintains a steady cash flow:

Early Invoicing 

The first step is to ensure you are never late sending out your invoices. Timely invoicing reduces confusion and ensures clients receive payment reminders quickly.

Optimize Your Payment Processes

One of the best ways to ensure prompt payment from your clients is to optimize your payment processes. It will help you reduce the time between sending an invoice and adding revenue to your bottom line. Here’s how you can achieve this: 

1. Diversify Your Payment Options

Offering multiple payment options can significantly speed up your receipt of funds. As a consultant or small business owner in 2024, accepting bank transfers, cheques, and mobile payment solutions can meet the diverse preferences of your clients. Additionally, consider integrating payment gateways where your clients can pay via debit and credit cards. 

Having said that, be mindful of transaction fees and credit card processing fees. While these might be an extra expense, consider these as an investment into the convenience for your clients which translates into quicker payments for your services.

2. Streamline Your Invoicing and Billing Processes

Your invoicing process must be efficient and error-free to ensure prompt payment. You should leverage modern invoicing or accounting software that can automatically generate and send invoices, complete with all necessary details. This minimizes the chance of delays due to incorrect information. Set clear payment terms on your invoices, and don’t hesitate to send friendly payment reminders as the due dates approach.

3. Utilize Technology for Payment Automation

Automation is your ally in ensuring a swift payment cycle. Employ technology to schedule billing, send out reminders, and follow up on overdue payments without manual intervention. Look for software solutions that can integrate these tasks into a seamless workflow, significantly reducing your administrative burden and helping to ensure that your payments are received promptly and consistently.

Offer Incentives for Early Payments

Start by defining the incentive structure within your payment terms. Will be offering discounts, coupons, or any other method? For instance, you can have a Net 60 term where your client should pay within 60 days. You can then offer a discount of say 10% if your client pays within 30 days.

Make sure that your incentive framework is transparent for clients to understand the advantages of adhering to expedited timelines. This clarity ensures that the incentive program is perceived as a mutually beneficial arrangement.

Lastly, integrate the incentive details into your invoicing process to reinforce the importance of timely payments. Communicate the potential benefits within the invoice itself, serving as a gentle reminder of the advantages associated with settling the payment promptly. This integration ensures that clients are consistently aware of the incentive program.

Being Clear in Your Communication

Establish clear and open lines of communication right from the start of the business engagement. Articulate your expectations clearly regarding payment terms, and encourage your clients to communicate any concerns or potential challenges promptly. This proactive approach to communication lays the groundwork for a relationship built on mutual understanding.

Show Reliability

Consistently meeting or exceeding client expectations contributes to a positive perception of your professionalism and reliability. Clients are more likely to prioritize timely payments when they perceive a direct correlation between the value of the services rendered and the financial commitment involved.

Address Payment-Related Issues Early

Address any payment-related concerns or discrepancies promptly and professionally. Rather than allowing issues to fester, approach them with a problem-solving mindset. Collaboratively work with clients to find viable solutions that align with both your interests.

Implement Payment Follow-Up Tools and Strategies

As mentioned earlier, it’s important to invest in invoicing or accounting software that automates payment reminders for invoices that are past due. Beyond this, consider implementing escalation protocols where follow-ups do not yield the desired response. This can range from escalating reminders from emails to phone calls and visiting your client’s office. Lastly, consider engaging the services of a professional lawyer and debt collector. 

Document all follow-up interactions systematically. Maintain a comprehensive record of communications, including dates, content, and any responses received. This documentation not only serves as a reference in case of disputes but also provides insights into the effectiveness of your follow-up strategies, allowing for continuous refinement.

Staying Informed about Regulatory Changes

Finally, it’s important to stay abreast of regulatory changes that affect your business. For instance, changes in tax laws can directly influence the financial aspects of transactions, including invoicing, deductions, and reporting requirements. Failure to comply with such regulations can cause delays in your invoice payments. 

A good example is the new regulation by the KRA for both VAT and non-VAT business owners to generate eTIMS invoices. As of 1st January 2024, KRA will not allow for the deduction of expenses that are not supported by an invoice generated through eTIMs. Because of this, businesses are requiring eTIMS-generated invoices. Failure to provide one will cause delays in your payments, affecting your business’s cash flows.