9 Tips to Help Creative Agencies Get Paid Quicker
Agency projects can take months to complete and wages need to be paid during that time. Consistent cash flow is critical for survival as businesses can get caught without cash quite quickly.
We’ve accumulated a list of tactics our customers have used to ensure cash is coming in as quickly and consistently as possible.
9 Tips to Get Paid Quicker
Here are nine tips that are designed to get invoices to your clients quickly and encourage them to pay timely:
Invoice Quickly - Don’t sit on unbilled time. You should send your client an invoice as soon as a significant milestone is complete. This requires your team to input their time in real-time and for project managers to prepare invoices quickly. Cumbersome systems that are not integrated and lack of discipline slow this process down.
Progress Invoice - Invoice your clients incrementally (up front and at designated milestones) for the percentage of work that is completed. Billing your clients regular intervals creates significant cash flow for your agency, allowing you to pay your team and vendors on time.
Automate Due Date Reminders - Accounting applications like Xero allow you to customize friendly reminders about upcoming or past due invoices. Applications like Invoice Sherpa take collections to the next level.
Include Payment Links on Your Invoices - You will see a much quicker response when you allow customers to pay directly in your electronic invoices. A clickable link such as “click here to pay now,” provides instructions and takes the guesswork out of where to go to send payment with one click.
Don’t Be Afraid to Penalize for Late Payments - Show your clients you are serious about your due dates by adding a late fee. These additional charges for being behind on a payment can impact your client’s bottom line enough to motivate a quick turnaround.
Document Payment Terms Clearly in Your Contracts - A written agreement between you and your client is essential. It outlines the terms, deadlines, and fees. You need to write clear and concise payment terms in your contract, and emphasize these payment terms on each invoice. For example, “due upon receipt” or “total amount due within ten business days.”
Collect Before Releasing Deliverables - Releasing the final deliverable before collecting on that last milestone creates no incentive for the client to send the final payment. Create a standard template that refers to the contract they signed.
Provide a Small Discount for Early Payment - It may seem silly, but even a small discount for early payment can incentivize clients to pay their invoice sooner than later. Two percent might not seem like a lot, but it’s a financially healthy way for businesses entice their clients to pay sooner.
Use Your Accountant as the Bad Cop - Have your accountant reach out and ask for payment. Involving a third-party diffuses the situation and allows you to maintain your relationship with your point of contact.
You may not be able to implement all of these tactics with your business and your clientele, but giving them some thought and implementing what you can will only help build a solid financial foundation for your business.
