The end of the year is getting closer and you have unpaid invoices. Even though business owners and freelancers are their own boss, managing cash flow is the hardest task of all.
With the end of the year right around the corner, we find more expenses, holiday vacations, and on top of that, unpaid invoices.
Getting paid is important and not getting paid is a big issue. Therefore, let`s see the effects of overdue Invoices:
Creates Slow Cashflow
You can`t invest in your company if you don`t have any cash flow, and as a freelancer, not having regular income means that you can`t pay your bills. You work to get paid; you are not a charity.
As a small business owner, how can you pay your workers and pay for the goods that you purchase if some of your clients didn`t pay you?
The Silent Killer
Maybe you would think that 2 – 3 unpaid invoices don’t equal much. Perhaps they don’t, but imagine that if you work with three clients and each of them has 2 unpaid invoices, well, you should get the picture.
Many companies have closed their doors because they had no cash flow to maintain the business and to pay their workers, and if you think that can`t happen to you, think again.
Not Dealing With Unpaid Invoices?
There are many reasons for this:
A Lack of Self-confidence
This is a common issue with many people. However, being your own boss and being a freelancer that is the boss, secretary, designer and even the Jack of all trades, means that you need to defend yourself and set boundaries. Try negotiating and sticking with the terms and conditions.
Upsetting the Client
I know this stage, as I was in it a few years ago. The client didn`t pay for my invoices in months, and I was too scared to call him to ask for my payment because I thought that I would make him angry and lose him as a client.
Well, in the end, I did call, and after receiving the payment for all the invoices, I stopped working for him, as I don`t need that kind of client. If you don`t respect yourself and your work, no one else will either.
A Damaged Reputation
There is a fear that is always there; we are all scared that our reputation will be damaged, and as a freelancer, your reputation is the stamp of approval by many clients.
This is a typical reason why we don`t pursue clients with overdue payments. On the other hand, a client that doesn`t pay can damage your reputation if he talks and is at risk of damaging their own, as a nonpaying client, as well.
Follow-Up on Overdue Payments
With all of these fears put together, you are absolutely right to request your payments.
If invoices are overdue, the best decision is to do a follow-up in the early stage, not after the invoices are overdue for a few weeks.
Furthermore, depending on the method that your client is using, you may receive a delay in your payment.
Know the Ways for Clients to Pay You
Online Invoicing Tools
This can be the best solution because you are getting your money the same moment your client pays you. It’s convenient for both parties; the client can pay you from their office, and you can receive payment from all parts of the world.
This process usually takes 1 to 3 business days after the payment has processed. If the payment is not in your account after five business days, be sure to let your client know because it may be a bank error.
This is a payment solution from the past. Shockingly, people are still using it even though it takes several days to receive payment and adds two more days until you can find time to go and cash that check.
There are many reasons why clients are not paying on time and many reasons why we do not follow-up with overdue payments, all from the fear of not losing the client from the worry of upsetting the client.
You are the one who is responsible for your own cash flow, so how you maintain it is all on you. However, the most critical part is to be professional at all times.