Money makes the world go round. This is beyond a quote or a statement, its the truth. First, remember that there is nothing wrong or inappropriate or even awkward about asking for payment from a client or customer until you are paid. In business, in order for your business to perform at its full potential, there is a need for steady cash-flow. Sometimes (actually a lot of times if you are self-employed), money might get stucked in the pipeline from clients and customers who are taking forever to pay or just outrightly ignoring the payment conversation (maybe because its just Daniel right? Daniel’s business doesn’t need money) As a business owner, entrepreneur and freelancer, it is very important not to let people take advantage of your skill, service, product and time and this involves getting paid everytime there is an exchange of professional service and value.
I know that money conversations are a little bit complicated and might even put a strain on relationships (for example when the client is a close friend or you consider them to be one) but money must be made for bills to be paid and your business to grow. So, how do you ask for money owed in business?
How do you ask for payment without making things awkward (I don’t think there’s ever a time talking about money isn’t awkward, at least for me), how do you get that invoice paid, how do you maintain the cash flow of your business, how do you ensure that people do not take advantage of the fact that you are an entrepreneur or freelancer that they can walk all over your business and not pay?
How to Ask for Money Owed in Business.
1. Remove Your Emotions.
Research shows that a large percentage of small business owners, freelancers and entrepreneurs find it “uncomfortable” to chase payments and debtors because they are “scared to come across as pushy or antagonizing to their customers and clients”, so in most cases, they just write it off and “move on” Take a look at this question found on MarketWatch from a freelancer:
“I work as a graphic designer and I have a question that freelancers and a lot of people with small businesses face. How do you get clients to pay up in a nice way? I am trying to sort out my finances and I sent two respectful emails to a client I did business with. I call them gentle reminders. I even put that on the email with the subject line “Reminder Invoice, and then I called directly. It is now nearly 110 days since the invoice went out. The love they used to have for me seems to have clouded over after the event”
Do you resonate with that question? I sure did because I know exactly what the guy is going through, from the tone of his question – I can tell that he is hurt and he’s emotionally attached to his business and this is the same for almost every business owner. We try to be so nice, try not to offend our clients (who owe us money) and we try to walk on egg shells because we know that the life blood of our business lies in referrals. So, we think that if we are too harsh to the client, they might get pissed – make payment and talk bad about us to potential customers or in worst case scenario, they might even ignore our message and go ghost on us.
However, if you look at how “normal businesses” chase down payments owed, you will see that they leave no stone un-turned. They will send you emails, letters and call you until they get their payment. They will never just send an “invoice reminder” email and just tick it off their to-do list. No, they will do whatever it takes to ensure that you know that you owe them and they will be on your neck until they collect. I remember when I owed Paypal money a while ago – I was receiving emails everyday and even phone calls 9a.m every freaking day and when I wasn’t able to pay on time after all their chasing, they hired a debt collection agency to collect.
Paypal is worth billions of dollars but they are chasing a couple 1oo pounds, why would you – a small business who isn’t worth a lot not chase payment you are owed? The answer is because we try to put emotion to the way we ask. You shouldn’t – business is business. It’s nothing personal, it’s just business (I want you to say this to yourself until you believe it). Remember that customers and clients not paying on time can be fatal for your small business.
Watch this video below! I found it interesting.
Some Freelancer stories of not getting paid:
“Used to do quite a bit of freelance photography/illustration. It happened a few times where I’d do work for a client (and I’m talking actual established companies) only for them a week later deciding against doing said project, hence in their minds, not having to pay. They would generally be shocked when I’d ask for money after, like that week of work I just did should be for free, since they decided they didn’t wanna go ahead on the project. I once had to show up at the office of a prominent magazine here in Canada, and refused to leave until I was paid, because they just stopped responding to my calls and emails. They begrudgingly gave me the money too. Glad I don’t have to deal with feeelancing anymore, always a grind, and always gotta hound people to het paid.” – Jagermeister1977 (Reddit)
“My mum learned to ask for payment because if people like this as well. She was a childminder, looked after someone’s kid for a week and instead of paying they just cut off all contact and ignored my mum completely. He only payed once my mum threatened to get lawyers involved.” – Minininininja (Reddit)
2. Move from “Personal” to “Professional”
Remember, this is a professional relationship, you shouldn’t be afraid to ask for payment. As a small business owner, entrepreneur and freelancer, chances are that you are the face of your business and this means that everything comes from you and you deal with clients and customers directly. So, when its time to get paid, you will most likely be sending your client (who at this point might have become your friend) a text or an email from your personal email or phone number. If the client isn’t being responsive and not paying on time, it is time to take things from the “personal” approach to the “professional” approach. So, this means instead of sending an email for example from danielnejo[at]gmail.com, it is time to send from info[at]presidentialideas.co.uk or whatever your professional email is.
This will allow your request for payment to seem as if it is coming from your company and not from you the person. People are more likely to take a “company” more serious than “a person” (even though the person is still the company)
So, an example of a professional payment email reminder would be:
Greetings, This is a billing reminder that your invoice no. #1022 which was generated on August 1 2019 is due on August 1 2019. Invoice ID: 1022 Invoice Amount: £3,400.00 Due Date: August 1 2019 If you have any questions or need assistance, please don’t hesitate to contact us. Best Regards, Presidential Ideas Team
This should ideally be sent from your official company email, something professional like Info@Yourbusiness.com. This allows the client to see and understand that this is serious and as a business person them self, they will understand what it means for a business to send an invoice for payment. In most cases, your client will reply with something favorable (either payment made or a specific date when payment will be made). However, if they still do not pay you money owed, we move to the next step…
3. Ask, Ask, Keep Asking.
First, remember that there is nothing wrong or inappropriate or even awkward about asking for payment until you are paid. Your clients or customers aren’t in control, you are part of an equal exchange in which you did work of value for them and they give you money, which is of value to you. The only time you should stop asking for money owed to your business is when it has hit your bank account, until then – you should keep requesting to be paid.
Once you’ve removed your emotions from the transaction, it becomes very easy to send payment requests and reminder emails. If they haven’t paid you in the time frame stipulated on your invoice, send a text or call them and ask what the problem is. Do not assume that the client or customer doesn’t have money to pay, you need to ask and request to know what is holding back your payment. Some clients or customers might have a certain time of the month that they make payments to their contractors, even though you shouldn’t have to wait for that but asking and requesting to know why payment hasn’t been made would let you know information like that.
Your clients or customers aren’t in control, you are part of an equal exchange in which you did work of value for them and they give you money, which is of value to you.
Keep the pressure up. Do not pester and then drop for a few weeks or months; by doing this, all your previous chasing is undone. Keep up a steady and persistent guerrilla warfare of getting paid for what has been delivered. Once you’ve sent the first email about payment due and haven’t still been acknowledge or paid; here is a payment reminder template you can use:
Greetings, This is the notice that your invoice no. #1024 which was generated on August 1 2019 is now overdue. Invoice ID: 1024 Invoice Amount: £3,400.00 Due Date: August 1 2019 If you have any questions or need assistance, please don’t hesitate to contact us. Best Regards, Presidential Ideas Team PS: Remember to send this email from your professional company email address to add more weight. Keep sending these reminders until you get paid.
One week after over-due payment email sample
Email subject: Invoice #1024 is one week overdue. Greetings, Our records show that we haven’t yet received payment of £3,400 for Invoice #1024, which is overdue by one week. I would appreciate if you could check this out on your end. Invoice ID: 1054 Invoice Amount: £3,400.00 Due Date: August 1 2019 If you have any questions or need assistance, please don’t hesitate to contact us. Best Regards, Presidential Ideas Team
Two weeks after over-due payment email sample.
Email subject: Invoice #1024 is two weeks overdue. Greetings, Our records show that we haven’t yet received payment of £3,400 for Invoice #1024. As another reminder, payment was due two weeks ago. Invoice ID: 1054 Invoice Amount: £3,400.00 Due Date: August 1 2019 If you have any questions or need assistance, please don’t hesitate to contact us. Could you reply to this message and let me know you’ve received it? Best Regards, Presidential Ideas Team
Three weeks after over-due payment email sample
Email subject: Invoice #1024 from August 1 is overdue—please send payment ASAP Greetings, Our records show that we haven’t yet received payment of £3,400 for Invoice #1024. Please be aware that, as per my terms, I may charge you additional interest on payment received more than 30 days past its due date. Invoice ID: 1024 Invoice Amount: £3,400.00 Due Date: August 1 2019I f you have any questions or need assistance, please don’t hesitate to contact us. Otherwise, please organize for settlement of this invoice immediately. Best Regards, Presidential Ideas Team
The idea is to keep asking for your payment and money in the most professional yet direct manner. At the same time, do not neglect the power of actually calling the client to ask about the payment, ask them if they’ve been getting your email and what the update or delay is on the payment.
How To Avoid Being Owed in The First Place.
1. Be Upfront About Money.
Its like when it comes to money talks, things instantly become awkward and it shouldn’t. The number one way to avoid not being owed is to be upfront about the cost of your service or product and gain the consent of the client or customer to go ahead. If they are not willing to talk about money, they will be a pain in the ass when it comes to paying. The mistake I’ve made in the past was to “assume” that the client will pay at the end of the job. So, no talks about money is done at the beginning of the job or even mid-way through it because of the assumption that the client “should know” that payment comes after service right? This has come to bite me in the ass so many times where I’ve put in hours, days and weeks into a project thinking that I will get paid at the end but when the project is done and the client is happy with the work, getting payment becomes Tom chasing after Jerry and in most cases denting the relationship between the client and myself.
The importance of being upfront about money is to actually know if the client and you are a good fit. No matter how cheap your service or product is – some people will not be able to afford it or willing to pay. So, in order to be a in position where relationships are not dented and you are not chasing after payment – TALK ABOUT MONEY FROM THE GET. So, you want to book me for a 2 hour session? My rate is X amount per hour, are you willing to go ahead? So, you want me to create a website for you? Based on the brief, my rate is £X,000. Should I send a proper proposal and invoice? This little money talks from the beginning will save you a lot of problems and headaches having to chase down payments.
2. Get Down Payments.
My number rule of thumb since I’ve been freelancing from 2013 has always been to get paid 50% upfront at all times. This should be the standard. Always ask to get paid a down payment before you spend hours, weeks and months working on a project. It is actually a win-win situation for both you and the client. For you; you get some money in – so even if the client doesn’t pay the rest on time, at least you’ve got 50% of the payment which is better than having to chase down 100% when you’ve invested so much time, resources and sweat. It also allows you to know that the client is serious. When someone is serious about doing something, they are more likely to be open to paying 50% upfront. For the client; they are committed – my favorite quote when it comes to this topic is “People who pay, pay attention”.
So, when a client has paid a down payment for a project, they are more likely to be committed to the project. They know that they have put their money where their mouth is and it’s only right to get the value for their money. So, its a win-win! Always aim to get down payment before you pick up your mouse, note pad, camera or whatever tool you use to create your magic! Trust me, you will be better of.
3. Be Clear About Your Time-frame and Charge Interest on Late Payment:
Often, business owners write “Due upon receipt” (am guilty of this as well ) as their payment terms on their invoices. But that’s a little vague, and it leaves too much room for your customers for incorrect interpretation. So, if the client claims they didn’t receive it, they cannot be held liable. Instead, you should clearly indicate your payment time frame in terms of days, e.g. “Due 15 days after receipt.” The same way your bank or people who loan you money will charge you interest on late payments, your clients can also be financially held accountable to pay you late payment fees, you just have to explicitly express and indicate this in your initial conversation/proposal or even invoice.
This will help you avoid being owed money.
Ensure that until and after you are paid, you remain strictly professional and kind whilst being direct about what you want done – which is to get paid for your work. Some times, clients and customers might be genuinely busy, caught-up with work or missed your emails due to influx of emails or messages and lost sight of your invoice in the process. So, it’s your duty to ensure that you stay on it and you get paid. If you use the strategies and tactics listed above, you should start seeing some positive impact on your payments.
Remember to remain professional and remember that there is nothing wrong or inappropriate or even awkward about asking for payment until you are paid. Your clients or customers aren’t in control, you are part of an equal exchange in which you did work of value for them and they give you money, which is of value to you. Have you had awkward payment situations with your clients and customers in the past or is someone owing you currently? Drop a comment below lets talk!