Image courtesy of Irish Typepad
Image courtesy of Irish Typepad

There are many people that are self-employed and a lot of them get concerned with customers that do not pay them on time or maybe do not even pay them at all. It can be difficult finding time to chase debts or even to really think about them until the cash flow problems start to happen. It is wise though, to address the problem as soon as possible.

If you can, it can be better to get all or some of the money from the customer before you start the job. This is particularly important if they are a new customer or if they have been late to pay in the past Never do a job for someone if they still owe money on a previous job, demand payment first. Even with small jobs, it is best to work with both these policies but in some industries asking for money up front is just not the way things are done, Do not be afraid to ask and try it though, you never know what might come up as a result of it.

It is really important to make sure that your customers are aware of your payment terms. When you send an invoice even if it is informal and by email, you need to make sure that people know what your payment terms are. You may want paying immediately or give them a few weeks or a month, this will depend on the industry that you work in and your own needs as well. Make sure that it is clear. Then if they do not pay within the time, send a reminder immediately. Keep things polite, explain you are checking if they got the invoice so that it does not look like you are chasing them up the first time. Then continue to chase them really regularly to make sure that they remember to pay you.

There are companies that will buy your debts off you. They will take your invoices and then give you some of the money you are owed and get the money back for themselves. This is something which will save you the job of chasing them but it will mean that you will not get everything that is owed. It is far better if you do the chasing yourself as you will get all of the money. It does not take long to send and email or make a phone call. Emails can be easily ignored so it can be better to chase by phone to make sure that they have got the message.

Some companies charge interest if invoices are not paid on time. Although this might seem like a good incentive, it may be difficult to impose and could put people off using your company. Think carefully and do some research before you make a decision about this. It can be worth speaking to companies who do it and see whether they actually do add on the interest and whether it gets paid. There may be standards in the specific industry that you are in as well, that it may be good practice to follow.