Money is always a subject of interest and worry for entrepreneurs. It can feel complicated and tied up in emotions stemming from early experiences. Those emotions can impact your business decisions. That’s why we’ve discussed money-related topics, like pricing and financial anxiety, many times on this blog.
Today I want to focus on a topic that doesn’t always get a lot of discussion – payment terms. Let’s start with a few questions:
- What are the terms of your invoices? Are they net 30, net 60, or net 10?
- How did you decide on your payment terms?
- Do you have discounts for early payments?
- Penalties for late payments? If so, do you collect those fees?
In our modern world, filled with electronic payment options like Bill.com, your clients can pay faster and easier than ever before. So if you haven’t taken some time to review the questions above and adjust your payment terms, I would encourage you to do so.
I’ve recently coached several entrepreneurs to adjust their terms from net 30 to net 10. To their surprise, there were very few objections from their clients. So think about how much healthier your business cash flow would be if you got paid three times faster.
Not only would this small change improve your cash flow, but it would also allow you to correct mistakes earlier. Let me give you an example. Say you unknowingly have an outdated email address for your client. You email your invoice to that address. Ten days pass, and they haven't paid their bill. Adjusting your terms to net 10 gives you the opportunity to check in with that client and correct the mistake much sooner than if your terms were net 30.
Before we wrap up today’s post, I want to address those of you who may be struggling with the idea of adjusting your payment terms. If that’s you, try saying to yourself, “I do good work, and I deserve to be well paid for my skills, talents, and efforts in a timely fashion.” This may make you feel a little uncomfortable or anxious. That’s okay. Money anxiety is real, but it can be managed. Like all things, it takes practice, reinforcement, and some help from others.
Are you tired of having a bad relationship with money? Invest time in yourself – let’s set up a time to talk.