It’s not easy to manage your finances as a small business owner or freelancer. You’ve got to pay your taxes and make sure you’re getting paid on time. And all the while, you also need to keep an eye on the bottom line!
It may seem like a lot of work, but it doesn’t have to be that way. I’m going to share with you some top tips for getting clients to pay you for a job well done, but also how to manage your finances while you run a profitable business.
Understanding Why Your Clients Delay
Understanding why your clients aren’t paying you on time can open your eyes to what you need to do to encourage them to pay, without breathing down their necks.
Here are three of the most common reasons why your clients might delay payments:
- Your invoice may be difficult to read. It might be tempting to put as many bells and whistles as you can into your invoice. But don’t make this common invoicing mistake. It’s better to skip the fanfare: stay on-brand, but professional and clean. The easier they understand what they owe you, the faster they will be at paying you.
- You haven’t included a clear payment schedule. You might have a casual agreement with your client on when you should get paid, but it’s easy to forget. Make sure the terms are on your invoice so they know when you expect money, and what might happen if they delay too long such as late fees and charges.
- They’re too busy. Especially if they’re running a business just like you, sometimes our clients can be a bit too busy. However, if you make it easier for them to pay you, you’re one step closer to having them just shoot the payment off to you quickly. You can look into sending digital invoices where they can pay quickly online.
What You Can Do to Get What You Deserve
You’ve worked hard on what your client purchased from you, but they’re taking their time to pay. Sometimes, it just happens. But you deserve a better life without stressing over things like this.
Tip #1: Screen your clients better. Make sure that they’re a good fit for what you do. Don’t just take every project blindly: if someone’s inquiring for a rush job and you know you’re swamped, politely decline and maybe even forward them to another business better suited for their needs. If you’re happy with the client, it will show in the work, so it’s better to work with those who bring us joy, too.
Tip #2: Get your invoices out as soon as possible. The faster you send the invoice, the more likely they are to pay on time: otherwise, it’ll just get buried in their inbox and forgotten about until you follow up with them again. It also helps getting paid faster, because they’re more likely to remember the great work you’ve done!
Tip #3: Stay personal. When emailing your clients about overdue invoices, consider making it into a personal email. By doing so, you’ll remind them subconsciously that there’s a human being waiting for them to pay what’s owed! Informal reminders don’t strike the heart as much as a simple, friendly email can.
How to Manage Everything With Style
Getting paid is only the beginning! Managing your finances is important when it comes to doing business. A well-managed cash flow can help you weather many business difficulties.
No matter how small your business is, keeping your personal and business transactions separate is important. Yes, you might use your laptop for both personal and business use, but keeping your business finances clear will help you in many ways, such as determining your taxes, tracking if your business is profitable, and knowing how your business is doing.
It may be confusing at the start, but using financial software to stay on top of your cash flow can help you keep them separate. There are many possible online tools you can use. There are full-featured accounting software, client management systems, invoicing software, and even personal expense and budget trackers.
If you’re not ready for a full-on project management software, even keeping a spreadsheet of all incoming and invoiced work will help you manage both your personal and professional time. This way, you can see how many projects you’ve clocked in, the amount of money you’re expecting to come in, and if you’ve got good leads for the next month.
Having this visibility into how your business is doing will not only help you plan your business’ growth (is it time for that new printer? or can I finally putting up an online shop front?) but also your personal life (do I have time for a vacation next month? can I adopt a new dog this year?).
Final Thoughts
Managing your own business can be both stressful and rewarding beyond measure. You’re your own boss, but you’re also having to juggle both your business and personal life!
But a well-managed business can help make your personal life fulfilling, too. Managing your business finances can help you know what to spend on and where, when it comes to both yourself and your business.
There are a lot of things that could go wrong. But, if you keep these tips handy for managing both your business and personal finances, there’s no reason you can’t have what you deserve.