5 ways for tradies to be paid faster
One common headache tradies of all types have to deal with? Not being paid on time, or sometimes, even at all.
When you’re busy trying to finish jobs on time, book new ones, and actually have some time off for yourself, it’s tough having to think about chasing overdue invoices.
When you’ve spent all day unclogging toilets, crawling around in peoples’ rooves or paving a new driveway, the stress of getting your cash flow right is something you don’t need.
Thankfully, there are things you can do to reduce the payment problem.
1. Discuss terms up front
Always explain terms to your customers up front, before you start any work.
Let clients know how much has to be paid up front; when their next payment, and future ones, will be due; and how they can pay you.
If, for instance, you have a call out fee mention this before you get to a client’s home or office to make repairs or give suggestions on how to solve problems.
When people are clear about their financial obligations, you’ll have less trouble getting money out of them. They also won’t be able to try the old “I didn’t know I had to pay by then” trick, or similar lines.
It’s wise to offer a few different payment terms, rather than just one, too. For example, consider accepting direct deposits and credit card payments (you can charge a small fee for doing so if need be).
2. Use software to invoice clients straight away
Lots of tradies get so busy installing new cables, repairing leaks, or plastering walls for customers that they don’t get around to sending out invoices for weeks, or even months, after they’ve finished work.
Unfortunately, being so slow to invoice people encourages customers to take their time paying in turn.
To get paid faster then, invoice ASAP.
If you accept credit card payments, you can even invoice and accept payment on the spot, on a mobile or tablet.
3. Make sure invoices prominently display relevant payment information
When designing or selecting an invoice template, make sure the balance owing, due date, and payment information will be clear.
This information should be in a prime position on the page, in a large, bold font that’s easy to read.
Include every type of payment method you accept, with details on how to go about each.
By doing this, clients won’t have to go searching for details in order to pay. They’ll also be aware of exactly when their payment is due.
When people have all the information they need at their fingertips, they have no excuse to put payment off until later. In turn, you’ll receive deposits sooner.
4. Automate reminders
Automating payment reminders is also key. Rather than having to remember to chase people up yourself, utilise technology.
There are programs such as EzyCollect which integrate with MYOB software and help you set up automatic reminders to customers that payment is due.
While some may be trying to delay payment, a lot of customers simply forget that they have a payment due.
For invoices that are a month or more overdue, pick up the phone. Call people and remind them that their bill is still owing and your cash flow is being affected as a result.
Hearing from you directly, and understanding the impact of their failure to pay, can spur customers on to pay you more quickly now, and in the future.
5. Provide incentives
If you still find you’re having payment issues, try providing incentives.
For example, tell people they will get a certain percentage discount if they pay within 5 or 7 days of being invoiced (or on the same day, if you prefer).
Alternatively, you could offer some kind of bonus or upgrade for fast payments.
Another option is to incentivise people by charging interest on overdue accounts, or by not continuing on with work until their bill is paid.