get-paid-fasterOne of the most vital parts of running a small business is getting paid on time. Cash-flow is everything, and prompt payments are a lifeline. So, what do you do when clients refuse to pay, or are slow to tie up invoices? These five simple tips should prevent unwanted delays and difficult customers from damaging your business.

Write a Contract

Even if your client’s a friend, don’t rely on a verbal agreement. An official contract prevents misunderstandings. It lays out the work you’ve both agreed on, when and how you’ll be paid, and what will happen if there are any disagreements.

Without this, it’s much easier for a client to make assumptions about payments, and challenge what you’d agreed on.

Take a Deposit Upfront

Take away the risk of a new client challenging your invoice, or avoiding payment, by taking some money before you start any work. It shows clients you’re running a professional business that wants to protect its interests, but also limits the risks involved in taking on new clients.

Deposits are effective in two ways. The client’s less likely to pull out of the project because they’ve already made a payment. And, even if the worst happens and they don’t pay what they owe, you still have something for the work you’ve done – and ideally enough to cover your costs.

Depending on the industry you’re in, a 50% deposit is the most common amount. However, for especially large, expensive and lengthy projects, 20-30% will be significant enough without startling your customer.