How to Get Paid As Soon As Possible

Let’s be honest. The important thing is not issuing invoices. The important thing is collecting your money as soon as possible.

Let’s do a small memory exercise. How much time usually goes by between sending out invoices to your customers and actually seeing the money? Five days? Three weeks? One month?

I know, it’s exasperating. You’ve fulfilled your part of the bargain, you’ve finished the project within the agreed deadline, you’ve delivered it and received your customer’s approval, you send the invoice in the hope of being paid as soon as possible and all of a sudden… nothing. Days go by, weeks… and you still haven’t seen the money in your bank account.

And meanwhile you have to pay overheads, taxes, rent, lunch bills. In other words, live.

In this article I explain how to reduce this waiting period to a minimum and how to ensure that your business survives payment delays.

A global problem

Don’t think that you’re the only one with late payment problems.

Many self-employed and small business people believe that it’s an isolated problem rather than a widespread phenomenon.

Not at all.

Payment delay is a problem on a global scale.

In the United States, small companies are having more and more financial problems owing to delays in payments from the large corporations that use their services, while the latter continue to increase their annual profits.

In the United Kingdom, 85% of small businesses have experienced payment delays in the last two years, despite the efforts of the British government to cut the 30.2 billion pounds that large companies owe their suppliers.

In Europe, according to a study carried out by the European Payment Index (EPI), the average time it takes to pay an invoice is 49 days between businesses and 61 days when the payment is made by a public institution.

Average payment duration in days by the European Payment Index 2013

Despite the various laws that have been enacted in this field, payment delay continues to be one of the main causes of bankruptcy among small businesses throughout the world.

What is the solution?

I’m not going to kid you. There is no miracle cure.

Formerly we availed ourselves of various subtle ways of ensuring that our customers paid their bills promptly.

Undoubtedly the easiest way of collecting the money you are owed however is to make it so easy for your customers that you leave them with no excuse for not paying you.

I have a photographer friend who solved the problem in a very simple way. He grew tired of completing photography assignments, delivering them to his customers and waiting weeks to see payment for his invoices. Until one fine day he went to his bank and asked for a credit card terminal. Now, every time he finishes a project, he asks his customers for their credit card and he charges the amount owing for his work. As simple as that. The waiting and the stress arising from not seeing his money on time have been banished.

If you can’t carry a terminal around with you, you can always opt for one of the many online payment systems that now exist.

And what about the commission that you have to pay for using them? I prefer paying this small fee than having to wait weeks at a time until your customer decides to send you a check.

If you do your sums, it works out much more profitable to pay the commission and have the money in your bank account than continue lending money free of charge to your customers.

That’s why at Quaderno we’ve designed an ultra-simple system to enable your customers to pay you via PayPal or with a credit card via Stripe. So in future they won’t be able to give you any more excuses for not paying you :-)

How about you? Do you have any ways of minimizing the time needed to collect payment on an invoice? I’d love to hear your thoughts.