Entrepreneur - - By Joseph Ola

6 Proven Techniques for Getting Clients to Pay You on Time

A person holding a pocketwatch

You’re a freelancer who has bills to pay. You hustled, working for clients and meeting every deadline, with the hope that once your work is done you’ll finally get paid and have enough to settle your bills. Unfortunately, it’s been five days, 20 days… 60 days after delivering your work, as promised, but there’s no pay. The client is satisfied. The client is just not paying you.

For most freelancers, the above scenario is becoming more and more common; in fact, research shows that 16 percent of invoices go unpaid, and a whopping 37 percent of invoices don’t get paid until after 30 days of submission.

Having to wait 30 days or more to get paid is a nightmare come true for most freelancers, and there seems to be no end in sight to this problem. Unfortunately, you have to eat and pay the bills; how do you balance getting enough clients to constantly give you work with getting clients to pay you on time? The following six techniques have been proven to get clients to pay you on time:

1. Use “Positive Reinforcement” to Reward Clients Who Pay on Time

In the 1940s, behavioral psychologist B.F. Skinner developed the famous “Skinner box” (also known as the “operant conditioning chamber”) to test his positive reinforcement theory in a series of experiments. In one of his experiments, Skinner placed rats in the box with a lever attached to a feeding tube. Once the rats pressed the lever, food was automatically released to them.

Initially, the rats pressed the lever by accident, but after so many accidental trials they started to notice a pattern. Eventually, the rats learned the association between pressing the lever and getting food, so they started to press the lever whenever they want food. This is positive reinforcement; the rats were getting rewarded whenever they pressed, the lever so they kept pressing it.

What can a 1940s experiment involving rats have to do with getting clients to pay you on time? Positive reinforcement. It isn’t unusual to see clients who were initially responsive to payment gradually start delaying payment as soon as they get used to working with you. Naturally, they are “busy” and plan to pay you “later.” Eventually, later becomes days, then weeks, then you literally have to beg to get paid for work you do. By introducing positive reinforcement, however, you can get clients to pay you on time.

You can introduce positive reinforcement by introducing a reward whenever a client pays you on time. For example, if a client pays you on time for a design job, you can send a message like this one: “Thanks for paying me on time! To show my appreciation, I’d like to design two graphics for you at a discounted price. It’s just my way of appreciating you for being a good client that pays on a timely basis.” After doing this for a while, the client notices a pattern and, to ensure the rewards (the positive reinforcement) keep coming, the client will always pay you on time.

2. Induce “Positive Punishment” to Get Your Clients to Pay You on Time

While psychologists generally tend to warn against using punishment to motivate behavior unless as a last resort, it has its place and time. The first point in this article assumes that a client started off on good ground and was paying on time in the first instance; this isn’t the reality for most freelancers. Some clients start off by taking you for granted, only paying when it is most convenient for them and completely disregarding your needs. How do you get these clients to cooperate? By introducing positive punishment to curtail their bad behavior.

Positive punishment is the introduction of something unpleasant to weaken an undesirable outcome; in other words, in order to discourage your clients from paying you late, you introduce a fine.

It is very important to communicate this right from the outset; you could tell clients, “Please make payment within five days of completing a project. If payment takes longer, there will be a 5 percent fee that increases for every extra five days of delay.”

3. Display Courtesy Before and After Getting Paid

You’ve worked based on an agreement with clients, so naturally you deserve payment. It’s that simple, right? Not necessarily. Apparently, being polite isn’t overrated.

According to a Freshbooks study that analyzed data from its paying users to see how long it takes clients to pay an invoice based on terms used in the invoice, they found out that being polite (by using words such as “please” and “thank you”) increases the percentage of invoices paid by more than 5 percent. Interestingly, this isn’t surprising when you consider the fact that research has shown that displaying gratitude and being polite tends to make people want to get along well and be friends with you.

When you thank a client, the client naturally feels warmer and friendlier towards you, increasing the likelihood of them treating you well and paying you on time.

4. Give a Discount (or Bonus) for Early Payment

If you’re struggling to get clients to pay you on time, perhaps they just need a little motivation.

A good way to get clients to pay on time is by giving them a discount for early payment; in essence, you’re rewarding their early payment habits by letting them save some money. Below is a comment on this article from reader Casey Neehouse that shows that this works:

Casey Neehouse comment

For Casey, offering her clients a 5 percent discount if they pay her invoices within five business days was enough motivation to get 100 percent of clients she made the offer to pay on time. In contrast, those who weren’t offered the discount took as much as 30 days before paying an invoice.

That said, it’s not easy to always offer clients a 5 percent discount. If you have a $100,000 project for example, 5 percent discount is a huge $5,000 — however, you could achieve the same effect by offering a 1 or 2 percent discount. Yes, you lose a small part of your income but you get paid on time. Better yet, you can factor the discount into your rates before even charging your clients in the first place. This way, you will be able to get paid on time without really losing anything.

5. Fine-tune Your Invoices

Sometimes, getting clients to pay you faster is a matter of how your invoices are designed. QuickBooks and Due.com recently partnered to find out the psychology behind invoicing and getting paid. They analyzed 250,000 invoices. Here are some of the key findings of their study:

  • Invoices with a logo increase your chances of getting paid on time by 300 percent.
  • Invoices with payment terms are 1.5 times more likely to be paid on time.
  • Invoices with due dates are eight times more likely to be paid on time.

Customize your invoices for your clients. Include their logo and company information, and make sure it is addressed to the right person. Also, include the terms on which you want to be paid based on an agreement with your clients. Most importantly, include a date by which the invoice should be paid.

6. Get Paid Upfront

The most effective way to get clients to pay you on time is by having them pay you before you start working. Many freelancer do not do this because:

  • They have no idea it is possible
  • They are afraid to ask clients for an upfront payment

Interestingly, having clients pay you upfront is the best way to get paid on time because you’ve been paid before you even start working. That said, it can be very difficult to get clients to pay you upfront. Here are some tips to help with that:

  • Establish strong authority and social proof: once you have a reputation so solid that a client knows you’re not going anywhere, it becomes easy to convince them to pay you in full.
  • Let them pay a discounted rate upfront: if you’re willing to give a client a good discount, such as a 5 or 10 percent discount, it becomes easy for them to make the decision to pay you upfront.
  • Let them know that paying you upfront is not optional: make it clear that paying you upfront is part of the conditions for working with you. This way, you only attract clients who are willing to pay upfront.
  • Use an escrow system: if your clients are very paranoid about paying you upfront, it will allay their fears if you suggest using an escrow system. This way, they pay you but the money doesn’t really get to you until they are satisfied with the project and release the money. Since the money isn’t with them, it becomes much easier for them to let go of any attachment to it and release it quickly.
  • Give them a 50/50 payment option: if all else fails, you can give them a 50/50 payment option. They pay 50 percent upfront and release the balance payment once they are satisfied with your work. This reduces the risk for both parties. This way, even if there’s a delay, you aren’t too affected since you’ve collected half of your payment.
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