Let’s set a scene that you probably know all too well: It’s the end of the month, and you are, once again, in the seemingly never-ending cycle of chasing down the invoices you’ve issued your clients. You’re not alone. According to Deloitte, 47% of businesses today are plagued by late payments. Unsurprisingly, the resulting cash flow problems affect a mind-numbing 25% of small businesses in the United States.
What is surprising, though, is that only 3% of late payments are caused by bad intentions. On the whole, clients want to pay you for services rendered - and you obviously want to get paid - it’s just that the whole process, from agreement to invoicing and billing, is frustrating, manual, clumsy, and time-consuming. It usually involves you or another staff member poring over emails to check agreements - did you note changes and amendments? Should you charge for those extra few hours? Then there’s the issue of discussing the payment method, and almost always - negotiating the payment due date.
It’s evident that neither side is happy about late payments; apart from being a drain on precious resources, it can also be a huge strain on business relationships, causing unnecessary friction between vendors and clients - even though they have the best intentions at heart - and significantly harming trust - one of the most crucial foundations for successful business transactions.
There is a solution
If you’ve reached this point and you’re feeling hopeless - don’t, because there is a way to reduce friction between you and your clients, enjoy a more efficient payment process, and get paid on time, every time. Here’s how:
Step 1: collect a payment method in advance
It may sound counter intuitive to ask your client for a payment method before you’ve even done the work, but - and you can see where I’m going with this - it’s a win-win situation for both parties.
We’ve already established that your clients want to pay you on time and that most late payments are not caused by bad intentions but rather by the messy, time-consuming, manual accounts payable process. In that case, collecting a payment method from your client in advance means one step less for both of you at the end of the month when you’re busy with a thousand other things, which brings you one step closer to a quick, painless payment process! Whether it’s credit card information or ACH, make sure to get their written agreement for you to charge them upon the billing due date so there are no surprises.
Step 2: charge upfront for some (or all of) your services
Not all services are created equal. It’s true that hourly or quantity-based services can only be calculated once the services have been rendered, but if you’re working on a pre-approved project with a fixed fee, why not pre-charge your client in advance?
This is especially true if it’s an existing client who already knows and trusts you and your services. If both you and your client know that you’re “good for it”, and that you will deliver what you promised, when you promised.
This is, once again, a case of understanding that in most cases, you have already established a healthy degree of trust with your client simply by signing an agreement with them, seeing as your client must have already done their research, had a call (or several) with you, and decided that you’re worth their hard-earned money.
At this point you may raise a valid point: it may sound good on paper to collect a payment method, or even charge in advance, but what about hybrid scenarios in which some of your services are fixed while others are hourly- or quantity-based? What if you’re working on a project where some services are billed upon signature of the agreement and others are billed upon completion? What if your client is willing to approve your hours automatically up to a certain limit, above which they would require you to approve with them?
Well then, keep on reading, because there is one overarching solution that can take care of the whole process for you.
Step 3: automate your entire billing and collections cycle
By now it should be evident that the only constant when doing business is change. Agreements can easily become complicated, with many ifs and buts, and multiple clauses that decide when and how much you’re paid based on the types of services you provide. But if you could take the frustrating manual process and automate it from start to finish, you could completely transform the way billing and collections are done for you and your clients.
We’ve already established that most businesses and their clients want a clean, quick - and most importantly - reliable transaction to complement their good work relations. Based on this insight, it’s clear to see that when every client touchpoint is automated, from initial offer to final payment, that’s exactly what you get.
Let’s take a look at how effective this can be. Since financial interactions with clients are scattered between emails, invoicing software, and phone calls, most of the process is still manual and is dependent on you and your availability, and it only adds fuel to the fire to know that an estimated $50 billion a year in running cash flow is lost through this type of revenue leakage.
But there are services that we use and pay for every day that don’t suffer from this affliction. Your music and video subscription services like Spotify and Netflix, work tools like cloud storage, and even the software you use to generate manual invoices for your clients are all billed automatically at set intervals. You trust the software, you trust the service, and ultimately, you’re happy to let the whole payment process run itself. The business gets paid on time, and nobody has to deal manually with payments. Why shouldn’t it be exactly the same for you and your business?
This is what we do at Anchor
Anchor's unique software transforms billing and invoicing from a frustrating burden into a pleasure for you and your clients by automating your billing and collections from proposal to payment, removing manual work and human error in the process. Clients add a secure method of payment ahead of time, facilitating automatic invoicing and collection at scheduled intervals or upon completion of work.
Agreements are live, online and flexible, allowing you to pre-fill any type of service along with the payment conditions agreed upon by you and your clients. It's simple, effective, and ultimately removes roadblocks and raises trust between you and your clients, leading to better business all-round.
To find out how you can easily automate your billing and collections, click here.