Unfortunately, many of us learn from hard lessons about money in adulthood. When you run a business, there are more hard lessons to learn, often at a high cost to your success. Certain expectations can actually be harmful to your business's cash flow. Take a look at these assumptions to see if you need to re-examine your thoughts around money and your business.
Here are 4 money myths that might explain why you're not getting paid.
Nobody Likes to Talk About Money
If you're afraid to discuss finances with your clients, you may not be getting paid on time or what you're worth. In fact, you need to begin the payment conversation early so you can gain some control over the outcome. Figure out your costs and set your fees accordingly. This discussion will provide your clients with price transparency and show them that your efforts are valuable.
My Clients Know What It Costs to Run a Business
Businesses that work with other businesses (B2B) face some of the same inevitable costs. Obviously, there's overhead - employees, office space, utilities - and these expenses have to be paid on a regular basis. When you assume that your clients know that you have bills to pay, you might also assume that they'll pay your invoices on time so you can cover your expenses, right? You can't always count on that.
It's Safe to Expect My Clients to Have Good Credit
When it comes to big projects or recurring billing, you'd think that your client would follow through on their contract with your business. You've put everything in writing, agreed on payment terms and both parties signed the contract. Later, after several late payments or non-payment, you find out that your client is unable to pay their bills after all. A business credit manager has the responsibility of underwriting credit applications so you're protected from non-paying customers. Do some research before issuing credit to avoid this problem.
I Don't Have to Remind My Clients to Pay Their Invoices
As a helpful tip, we suggest reminding clients of payment due dates before they're due. This is especially true if it's a new client or a client that has paid late in the past. Other best practices include:
- Setting a regular schedule for sending invoices.
- Reviewing and changing credit policies based on late-paying customers.
- Send friendly follow-up reminders.
- After 45 days or in response to no communication, escalate the account to third-party collections.
Every business and every person within that business is distracted and busy. These assumptions will greatly limit your cash flow and your ability to gain control over your business finances. Drop these money myths and get your invoices paid sooner rather than later.
