What if you could get more clients to pay you on time, without investing more of your valuable resources into that painful process? Adding the right language to a contract at the beginning of a project can help make sure you get paid for your work on time – and eliminate the headache of having to chase down your clients later.
Consider the miscommunications that can arise in a transaction: businesses want to pay with a check when you only accept credit cards, or maybe they can only issue payment a certain period of time after they receive the invoice; sometimes wires get crossed and one of the project managers expects the accountant to pay and vice versa.
In these situations, don’t let their problems become your problems. A straightforward contract can put the ball entirely in their court, eliminate excuses, and get you paid faster.
Fees and Deadlines
Be clear and direct about when and how much you must be paid. Speak in terms that are nearly impossible to misconstrue. For example:
First payment of 50% is due upon signing of this contract.
Final payment of the balance is payable upon receipt of invoice. A 5% late fee will be applied to the balance after 30 days.
Switch up the specifics to suit your needs. Maybe it makes more sense for your business to ask for 3 payments of 40-40-20, to get paid monthly, or to have no deposit at all. The point is to be explicit regarding your requirements.
Upfront and direct policies ensure there are no surprises for either party. The invoice at the end of the project should not be the first time the client learns about your late fee policy.
Methods of Payment
30 days after you issue the final notice should not be the first time you find out your client wants to pay you in gold dust (what’s the exchange rate on gold dust, anyway?). Don’t forget to let them know exactly what form of payments are acceptable. If you don’t accept checks, or if you only deal in cookie exchanges, now is the time to say so.
Who You Gonna Call?
Your contract should require the client to fill out who the contact person (or ideally, persons) is at their organization for payment. You want their name, phone number, and email address at the very least. This creates identifiable responsibility on the client’s end, in addition to offering you a clear point of contact in order to remedy any late payments as soon as possible.
Remember, Professionalism Gets Paid
Will you sometimes need to be flexible? Of course. There are all kinds of reasons clients pay late, and some of those reasons are legitimate. Even so, clear language in the contract ensures that your invoice doesn’t go ignored, put off in favor of paying someone else’s first, or lost in the shuffle.
If you’re not already specifying payment terms in your contracts, start immediately. Not only does this simple act help everyone understand what is expected and when, but it’s also a signal to your clients that you deal with payment as professionally as you deal with every other aspect of your business. A clear contract requests the same behaviors of them.