There’s something highly satisfying about finishing up on your latest job and sending your client an invoice. But when your client is too slow to pay or fails to settle an invoice, you can run into serious cash flow problems. Let one or two slip through the cracks, and it could seriously break your business. Below, we’ve put together some tips to help you deal with late payments as a tradesman, and reduce the chances of losing out to clients trying their luck.
Set a deadline before you get started
The best way to increase your chances of being paid on time is to establish clear payment terms and deadlines. Although most tradespeople are happy to be paid within 7 days or even 30 days, you are free to set whatever deadline you’d like – the same day as you wrap up on a project, as long as the client agrees. Incentivise early payments and consider adding a late payment policy to encourage your clients to pay you on time – these things really work.
Get the invoice right first-time
It’s natural to want to send your client an invoice as soon as you’ve put down your tools, but you should double and triple-check to make sure you’ve included everything on your invoice. The last thing you want to do is get in touch with a client in a month’s time and tell them that they’ve underpaid, demanding more money from them. Use an accounting tool so you can break down exactly what you’re invoicing your client for, including parts, labour, and so on.
Communication is everything
Perhaps the most important piece of advice that we can give you is to communicate with your client. If they know where you’re at, the progress of your job, and the amount they’re due to pay, there’s much less chance of a dispute down the line. What you don’t want to happen is for a client to say “Hey, you said this would be £500, why are you charging me £800?”. Once their payment deadline is approaching, communication should be maintained; you can send regular reminders via email or phone, serving as a courtesy rather than a nag.
Paying should be as easy as possible
Another way that you can reduce the chances of late or unpaid invoices is to make the process of paying as straightforward as possible. Whether you accept cash or only online payments, spell out the process on your website and invoice, and think about automating part of the invoicing process using an accounting tool. Alternatively, you could consider signing up to PongoPay, which offers a tradesmen payments service that cuts out the usual faff. Play around with your options and see what works best for you and your customers.
It’s totally natural to feel angry and frustrated when a customer doesn’t pay you on time or keeps coming up with excuses, but you must stay level-headed and professional when you are chasing. If you fail to do so, you could damage your reputation and make it even less likely to be paid. Be polite, firm, and be understanding of your clients’ current circumstances. And there’s nothing wrong with laying it on thick – stress that you’re self-employed and rely on invoices being paid on time to feed your family. Sometimes emotion makes a difference.
Are you a tradie? Do you have any tips? Let us know and check back soon for more advice.