When you have a small business or you work on a self-employed basis, you are likely to find that sometimes you will have to provide goods or a service before your client hands over full payment. There are various reasons for this. Perhaps your client wants to ensure that they are happy with the work before they pay. Perhaps you are offering products on finance. Maybe you have long-running contracts and are a little more flexible with favourite clients. However, regardless of your reasoning, you need to ensure that people can’t take advantage of you and that you always receive whatever money is due in exchange for your work. Here are a couple of ways to protect yourself and keep on top of your professional finances!
Having Legal Groundwork Covered
When you offer your services out, you should always cover legal groundwork before actually carrying out any work. You should ensure that a contract has been signed by both yourself and your client, so that you both have a thorough understanding of what role each party should be playing in the transaction you are carrying out. But what actually is a contract? Well, legally speaking it is a legally binding agreement between two or more parties. It has to be deliberate and all parties involved have to be competent and engaging with the contract voluntarily. People will generally take three steps in the process of joining a contract. First one party will make an offer. Next, another party will accept the offer. Finally, there has to be a form of agreement that can be drawn upon should either party not carry out their agreed role according to the contract – this may be spoken, but is most commonly written. The contract itself will outline each party’s rights and responsibilities. Make sure that it details what services you need to provide, as well as how much the client will have to pay in exchange for your services and when this sum should be paid. If you are carrying out high-expense work, such as property renovation, you can also request that your client has some kind of collateral on the work. This will allow you to take legal action, in this case with builders lien lawyers, to ensure that you are definitely paid what you are owed.
Monitoring Your Accounts Receivable
No matter what type of business you’re running or what services you are offering, controlling and understanding your accounts is highly likely to be one of the most complex aspects of your job role. However, it is an absolutely essential part of your professional process. After all, if you don’t have control of your accounts, you will quickly lose control of your general finances, and this could result in further problems down the line such as debt, unaccounted gains and losses, or difficulties when it comes to filing tax returns. Perhaps the most important part of your accounts to monitor are your accounts receivable. Accounts receivable (otherwise referred to as AR) are the outstanding invoices that you or your company has. In short, it is the amount that you are owed by your clients. If you have transactions pending in your accounts receivable, you have already provided your client with goods or a service, and you are simply waiting for them to cough up the cash for what they have received. Keeping an eye on your accounts receivable will ensure that you cotton onto any clients who have been waiting in this section of your accounts for an extended period of time.
Send an Professional Invoice
Nothing is more frustrating than a late payment. Sadly, there are bound to be multiple occasions throughout your business career that clients, partners, or other individuals fail to cough up the cash that they owe on time. While you may be itching to get your hands on what you’re owed, you also don’t want to pester or hound people. So how do you go about reminding people that they owe you money while maintaining a professional demeanour? Send an invoice! An invoice is a polite reminder that will encourage individuals to pay for the work that you have carried out for them. There are all sorts of services out there that will help you to tailor a unique invoice template for your small business. This can be used after every transaction, as long as you simply alter details such as the dates of the work carried out and the total cost of the work carried out.
Try Out Automated Payment Reminders
Chances are that the clients who have been hanging out in your accounts receivable for a while aren’t doing so on purpose. They probably have all sorts of work being carried out on their behalf and you may have simple slipped by the wayside in the payment process. So, it’s always worth making use of automated payment reminders. These are messages that can be sent out to people who owe you money as a friendly reminder that they need to make a payment. These reminders should detail the nature of the loan, how much their next payment will be and when it should be paid or will be deposited from their account. They can take the form of a text message, email, or letter.
While getting paid for your work shouldn’t be a challenge, there are likely to be a few occasions throughout your career that you might have to put a little extra work into claiming what you’re owed. These simple steps should help you along your way on this journey!