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Transactions and Collections: How to Get Paid and Paid on Time

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Transactions and Collections: How to Get Paid and Paid on Time

By Caron_Beesley, Contributor
Published: November 9, 2010 Updated: December 5, 2011

It doesn't matter what type of business you operate, making sure you get paid on time and as seamlessly as possible (for both you and your client) is critical to your success and survival.

But knowing how to get paid is-t as easy as it sounds. The payment options that work for one business, may not work for another. Likewise, getting paid on time requires you put the right pre-emptive measures in place for collecting what yo-re owed and managing past-due payments.

To help you make the right decisions for your business, here are some pointers about setting up customer payment options, tips for getting paid on time, and what to do if you do't!

What Payment Options are Right for Your Business?

It does't matter whether you operate a brick and mortar store, an e-commerce site, or a home-based business, cash has to flow from A to B. But what payment options are right for your business? Here are some quick insights and FAQs that may help you decide.

  • Cash Only - Cash only businesses still exist in today's economy but are they missing out? If yo're not sure if you are ready to make the jump to plastic, read this quick article'Will That Be Cash or Credit?
  • Credit and Debit Cards - Should your business accept debit and credit cards? What are the costs and benefits? This quick guide to the Pros and Cons of Accepting Credit and Debit Cards outlines the benefits, pitfalls, and laws that regulate their use. If you decide to go this route, read this Guide to Setting up a Merchant Account for FAQs on the process of establishing a clearing house for accepting card-based transactions.
  • Online Payment Services - The rise in popularity of alternative online payment services such as PayPal and Bill Me Later have begun to change how consumers shop online (some freelancers insist on being paid via PayPal). If you've never used one of these services, the idea may sound confusing but in reality is quite simple. Check out this quick Guide to Online Payment Services to understand what these alternative payment options are, how they're used, who uses them, and if they're realistic options for your business.

Another increasingly popular payment option are layaway plans. Layaway plans typically require customers to pay a deposit, generally a percentage of the total price for an item, and make additional payments until the total cost is covered. Retailers agree to hold the item for the customer until the payment plan is complete, at which point they can take home their purchase. 

Getting Customers to Pay On Time

You're provided a service, invoiced your client, but payment is past due and ther's no indication of when you're going to get paid! It's frustrating but inevitable. However there are some measures you can take to pre-empt and deal with this troublesome issue.Read Getting your Customers to Pay-Up: Tips for Protecting Yourself from Non-Paying Clients, for tips.

When Customers Don't Pay

Customers don't pay for a number of reasons - cash flow issues, poor accounting, or sometimes they may just consider the work incomplete. Whatever the reason, and no matter what pre-emptive measures you have put in place, this follow-on article to the one above, outlines some soft and legal options for collecting or pursuing client debt: Getting your Customers to Pay-Up: Tips for Collecting from Non-Paying Clients.

Additional Resources

For more information on debt collection options and the legal and regulatory ramifications read the government's 'Plain English Guide to Collecting Debts'.

About the Author:

Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

Comments:

This is probably one of the hardest things as an indpendent contractor - but I find that when my clients don't pay, they change their minds rather quickly once I remove my services from them.
Author was brief. Getting paid on time correlates well with good relationships with clients. Poor relationships indicate slow payments . Poor accounting is a factor.
Yes, Loans are an important part of the business world, so incorporating them into the overall plan will eventually help your financial process succeed.
Caron, Good tips on getting payment. Luckily, I've only had two incidents on it and have required contracts on all my freelance work. I have a question. Is it legal to have a customer to pay everything up front in advance even if I don't perform the work for 3 months? Thanks! Kelly
Getting paid on time is very important for a business. Thanks for the advance, very helpful. Apartments for rent in the Philippines, Condos for Rent in the Philippines
Being able to set up a plan and sustain that plan is very important for businesses and personal finances. After you have a plan in place, make sure it coincides with clients and suppliers. This is a very important part of the process because if the plan does not work with other companies then essentially it will not work for your company. Another important thing to incorporate here is your actual finances. Being debt free is nice, but often times that is not the case these days. Loans are an important part of the business world, so incorporating them into the overall plan will eventually help your financial process succeed. Organization, preparation, and execution are the three main factors when sustaining dependable transactions and collections.

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