Whether you own a marketing agency, real estate websites, or you’re a Nigeria-based freelance photographer that submits beautiful imagery to magazines, you’re susceptible to dealing with clients who don’t pay their invoice in a timely manner.
Of course, one of the biggest ways to combat this is to utilize online invoice software programs that help streamline the payments process. With our Invoice software, you’re able to create and track professional invoices, send payment receipts, manage expenses, and much more.
If you recently submitted an invoice – or are planning on submitting one soon – you should take proper precaution. By understanding some of the more common reasons that invoices aren’t paid, you can prevent yourself from making some costly business mistakes. With that in mind, here are three major reasons that many clients don’t pay their invoices.
1. You failed to sign a contract.
Sir Richard Branson once said, “In an ideal world, a handshake would be all that an entrepreneur or executive needs to seal a deal with a business partner.” However, in the real world, it just doesn’t work out this way.
The fact is, if you don’t have a contract, clients are less inclined to pay you on time – or sometimes at all. It can be easy for many freelancers and small businesses to take on work without a contract. Perhaps you felt comfortable with the person you were doing business with and couldn’t imagine a scenario where they would turn back on their ability or willingness to pay you for the work you did. This is why contracts are so important, no matter how trustworthy a person or company seems.
Your contract should clearly state the budget for the project, the scope of the work, deadlines, and any miscellaneous payment terms you agree to.
Also Read: Ultimate Guide To Online Invoicing For Small Businesses.
2. There’s a disagreement about the work.
A dispute over an invoice can stall your payment for much longer than you expect. There are many reasons a dispute could occur. For example, the client might feel like you charged them way too much for services rendered, or perhaps they aren’t happy with the quality of work.
In order to deal with this situation, communication is crucial. Many small businesses and freelancers choose to take the line of defense, which can lead to further payment delays. Instead, remain patient and schedule a chat to discuss the work. Allow them to address each thing that they are unhappy with.
You’ll notice that in the majority of dispute cases, there’s something highly specific about the work that the client isn’t happy about, and rarely are they unsatisfied with the entire project. Once you’ve identified the source of their unhappiness, you can request that they pay for other areas of the project while you get to work on improvements.
You might consider creating a list of deliverables and assigning a value to each, which allows you and the client to negotiate which parts should be paid while the remaining work is in progress. To prevent this type of issue from happening (or from happening again), be sure to have a contract, possibly with a numeric value for each type of service. For example, if you were designing a website, there might be a section for logo design and another for theme design.
Also Read: 5 Tips for Maintaining Positive Cash Flow.
3. Your Client can’t afford to pay.
Every once in a while, you end up working with a client who confesses that they cannot afford to pay you at the end of a project. Like some of the other reasons listed, there are a few reasons why this situation might occur.
For instance, it’s not uncommon for your client to also have a client of their own. They may be outsourcing a portion of the work as a part of a larger overall project. In this situation, they may be waiting on payment from their client before they have the funds to hand over to you. It’s also possible that their sales are down, or that sudden expenses have come up that they couldn’t have predicted.
It’s important to realize that, regardless of what a client tells you or what particular position they’re in, failure to make payment is irresponsible. While it’s polite and considerate to wait a few days, or even a generous few weeks to receive payment, you should take matters into your own hand if it isn’t resolved quickly, and/or the business isn’t communicating with you.