Businesses that operate on a project-by-project basis must have a robust payment plan in place to keep business running and account for how unpredictable their schedules can be.
Getting lulled into a slow period can lead to treating an upfront transfer of funds as pay day, failing to account for project costs. It’s also easy to confuse having lots of work on the books with lots of income when that might not necessarily be the case.
But there are things a media business can do when billing customers to ensure a strong cashflow and keep the lights on.
Send your invoices promptly
These are the starting point for any project-led business wanting to get paid, so sending them out promptly is a must. It’s a no-brainer, but it’s easy for them to slip to the back burner once projects pile up and your team’s attention is focused elsewhere.
The advantages of a prompt invoice system are clear: the earlier your client understands how much they owe, the earlier they can pay for your services.
Failing to do so could hurt your brand as well as your cashflow for no good reason. What does it say about a business’s day-to-day practices if they’re indifferent to sending their invoices? And why should you expect a customer to stick to their payment deadline if you can’t stick to a billing deadline?
Actively processing invoices as they come, then, is a good idea, rather than waiting for the end of the month to do it, while keeping a template of your invoice will mean you just have to substitute information relevant to your client to create one.
Simply setting yourself a calendar notification to bill and sending reminders to your client three or five days before their payment is due is another simple way to keep a regular cashflow.
The best thing you could do, however, is sign up for cloud accounting software, which can do everything just mentioned but completely automated and entirely from your smartphone, tablet or laptop.
Set out a clear plan with clear rules
Many project-led businesses split up payment to take some in advance of the project, some halfway through and the rest upon completion.
Such a plan ensures a steady stream of cash for each project, helping to contextualise the money coming in, while you still will have earned some cash from clients who cancel if you get a deposit or an upfront payment from them.
When providing a client a lot of content over a year or so, you could consider monthly payment, or payment for every two or so pieces of content you provide. Again, this gives your cashflow some security and will make the project easier to budget for your project managers.
Just remember that a pile of invoices doesn’t necessarily mean an exceptional turnover, so be sure to work out the deadlines and milestones with your client to split up how much they will eventually pay in total.
If that doesn’t work and you’re happy for clients to pay a lump sum at the end of a project, then it’s that much more important you get paid on time, in which case, you should only release your product after you receive payment.
This way, you can be certain that you’ll get paid promptly, because the client will presumably want to reap the benefits of your service as soon as they can.
At some point, no matter how easy you make it to let your clients pay you, you’ll occasionally be let down, so don’t turn down applying penalties for late payments. Only an unreliable client would object to that, if warned in advance of course.
Any overdue fees would have to be put into your contract, which is completely worth it if the worst case scenario comes to light and you have to pursue legal action over missed payments to protect your business.
Maintain positive relationships
A client that doesn’t feel like a revenue stream is one that is far more likely to pay you on time and will go out of their way for you if you go out of your way for them first.
Featuring them in your own content, going beyond expectations to solve a problem for them, and offering a one-time special bonus service can show them they’re not just another client.
Even just getting to know your client personally and addressing them by their name in correspondence could draw them closer to you and your business, transforming them into a loyal customer and subtly prompting them to fulfill your payment wishes.
You could also reward those that pay early with early bird discounts, and offer to transfer a portion of an invoice to a future one if a client is struggling to pay.
After all, they’re trying to keep their lights on too, and demonstrating you recognise that goes a long way.
Get in contact for a chat about improving cashflow in your creative or media business.