5 ways to decrease late payments in your creative business
When you start your business, you think that you just send an invoice and *poof* you get paid. Yes, that happens a lot but other times, it’s like pulling teeth to get someone to pay…
And if you’re newer in your business journey, that can often be an uncomfortable conversation to have and cause a lot of stress that’s not needed. You also end up wasting your valuable time being a collection agent instead of… idk running your business and serving other clients.
I know all of this because in my previous business, we didn’t have a system in place to manage late payments effectively. We had to check-in with too many of our clients letting them know their payments were late. It created a lot of strain and quite frankly, wasted a lot of valuable time. When I started this business, I knew I wanted to avoid this as much as I possibly could so I decided to implement some different strategies to help me get paid and keep project running smoothly along the way.
Here are some of my tried-and-true strategies for decreasing your late payments:
Have clear payment terms
In your contracts, make sure you have very clear payment terms laid out. This sets your expectations right up front and provides you with a guide for how to move forward if a payment is late.
Include things like:
When they will be invoiced
How they can pay: Bank draft, credit card, etc.
Do you have a grace period?
Late fees: How much and when they will be applied?
Additional policies/consequences: Will you pause work if the client is late to pay?
The hope is to never have to enforce these terms but you do not want to be caught without them. Without having these in your contracts, it makes it much more difficult to move forward in collecting your payments.
Automated payment reminders
Most invoicing softwares have this now but make sure you have automated payment reminders turned on. This means you don’t have to be the one manually (and awkwardly) checking in to see where your payment is unless it gets unacceptably delayed.
I have mine set to send on the due date, 3 days late, 7 days late, and then 14 days late. I don’t think I’ve ever had anyone go longer than the 14 days now that I have this feature enabled.
Enable automatic payments
This won’t necessarily be applicable to all of your clients but if you have retainer clients, this is clutch. Essentially clients can enable automatic payments (if this is what you want them to do, outline that in your contract terms!) so each and every month their chosen payment method is automatically charged. They don’t need to remember to pay you and you don’t have to remind them to pay you.
This has by far been the most effective implementation I’ve done that has decreased late payments.
Saved payment method
If you don’t have retainer clients and automatic payments don’t make sense, you can also find an invoicing software that allows clients to save their payment method. This means they pay the first invoice, save their payment method, and next invoice they can pay with one click. No going to search for their card in their wallet. It’s that simple and that effective.
Have a strategy
While your contract will help guide this, it’s important to actually have a plan in place on how to deal with late payments. While I have the automatic reminders turned on, I also never let it get to 14 days late because I don’t have a grace period for payments as outlined in my contract. However, I’m not going to breath down someone’s neck if they’re a few days late (I have more important things to do). But if it’s been a week, I send a personal email making sure they at least got the invoice and let them know that it is past due. People tend to respond to the personal emails more quickly in my experience.
If I still don’t receive a payment within 2 days, I will check-in again and let them know if I don’t have the payment by X date, I’ll have to pause work.
Knowing each step I will take and when I will take it means I don’t have to overthink it and waste my valuable time. It streamlines the process and allows me to collect my payments more efficiently.
What invoicing software should I use that has all these features to decrease late payments?
There are a lot of options out there but I prefer using a CRM like HoneyBook. They have all of the features I talked about above but you can also make sure you never receive payment without a signed contract and vice versa because it’s all coming packaged together from the same place.
This allows me to manage the entire onboarding process seamlessly so my clients know exactly what they need to give me prior to their start date. This helps set the entire project up for success from the very beginning. If you’re looking to implement something similar, I have a special deal where you can give HoneyBook at try for just $1/month for 8 months!*
*This is an affiliate link and I may receive compensation if you use it to sign up.
Overall, make sure you plan for the worst and create as automated of a system as possible that helps you behind-the-scenes in collecting any late payments. These systems will help alleviate a lot of stress and get your paid more efficiently.
And with more and more time, you’ll get a feel for any red flags to look out for in people that may not be your ideal clients so you can avoid these scenarios all together. Everything I’ve mentioned was because I’ve learned from my mistakes and now I very rarely have a late payment. (Seriously, I think I’ve had 1 in the last 12 months!)
Want even more help with your marketing?
My Strategy Intensives provide you with a complete brand and marketing strategy based on market research and analysis and your own business metrics.
My 60-minute sessions are great if you need help brainstorming or working through a specific challenge.
Not sure what you need but know you could use some support? Reach out and I’ll help guide you in the right direction (whether that’s working with me or not!)
