How Do Small Business Owners Ensure They are Paid?
The world of business can be exciting, but it can also be unpredictable and risky at times. One of the most common risks small business owners are faced with is the potential of not being paid promptly by a client for work completed or product delivered. This can cause considerable hardship for businesses that may need funds to pay for expenses required to keep the operation going. Fortunately, there are a few things you can do to help make sure your clients pay you on time.
Have a contract
Signing a contract which spells out the terms of your agreement with your client can make it clear to your client when you expect to be paid for your work. Also, a signed contract can be used as evidence if you have to take your client to small claims court to receive the money you are owed.
Request upfront payment
You may want to require that your client pay all or a portion of your fee upfront. Requesting a retainer may also be appropriate for many types of businesses. Another advantage of receiving money upfront is that it is considered legal proof of some type of agreement between you and your client. Also, even if ultimately the client does not pay for your full invoice you will at least be paid for a portion of the work, minimizing your risk of loss.
Require payment at time of delivery
Another option is to request payment at the time of delivery of the work product. This means you should collect your money upfront right before you deliver whatever product it is your client is expecting from you. This may be especially important for new clients that you do not have an extensive history with.
Regular billing for ongoing services
If you have a type of business that provides ongoing services, make sure to have a regular billing schedule. This will help to avoid the amount of unpaid work piling up which can lead to your business not having enough cash flow to continue operations.
Offer multiple payment methods
Making it as easy and convenient as possible to receive payment from clients will increase chances of you actually receiving the money you are owed. Offering multiple methods of payment can help with avoiding non-payment issues from clients. If possible for your business model be sure to accept cash, credit card, debit card, and even checks. You should try to accept as many mobile wallets and alternative payment platforms as possible.
Be ready to go to court
Although it is usually not preferable there may be many times where taking your client to court is your only remedy. If this turns out to be the case you want to be ready to do this in an efficient and effective manner. Be sure to keep good records since you will need to provide evidence that your client in fact does owe you money for invoices. Make sure to research the procedure for filing a claim with the small claims courts within your geographic region.
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Paramount Wealth and not necessarily those of Raymond James.
Raymond James and its advisors do not offer legal advice. You should discuss any legal matters with the appropriate professional.