How To Trick Clients into Always Paying on Time

Irritating, isn’t it?

Every month you work your fingers to the bone, delivering results clients benefit from practically right away.

And then, have to wait for weeks until you see your reward – your hard earned cash.

What worse, most of the common ways to get clients to pay on time offer little help:

Customers ignore your T&Cs, no matter how firm they are. And rarely consider your great work worthy to reward you with immediate payment.

Not to mention that some strategies can even cause more problems. For example, early payments discount only devalues what you do.

But does that mean that you can do nothing to get clients to pay on time?

Nope. Quite the contrary, in fact.

And in this post, I'll show you 5 unique strategies to trick clients into always paying on time.

Intrigued? Let's get started then.

#1. Start Charging Retainer Fees

Depending on how your agency operates, you might charge some upfront payment, and then, raise the invoice for the remainder of the fee once you complete the entire project.

And I admit, it’s a relatively simple pricing model to work by. It keeps everyone on the same page when it comes to the final price and deliverables.

But… it also leaves your agency vulnerable to cash flow problems resulting from late payments.

To overcome this, consider switching to a retainer fee model.

There are many ways to calculate and charge a retainer fee. The simplest way is to divide the price for the work you need to do for a client by the number of months you’ll be doing it for.

For example, if your project total is $4500 and you’ll be working on it for three months, then you could charge the client $1500 each month.

A more advanced way, however, takes your costs, employees, taxes, and many other factors into consideration too.

But regardless of which option you choose, the benefits of a retainer model are clear:

  • You get paid a set amount every month for the duration of the project. This helps you predict the cash flow and manage the agency’s growth.
    • You get guaranteed payments. That’s because this fee model practically forces clients to pay on time. In most cases, companies require each retainer payment either upfront or immediately at the end of the month. And they won’t do any work until the payment clears.

#2. Productize Your Services

I admit, I’m a big fan of this strategy. And I run my agency as a productized service.

Because you know:

Productizing a service takes retainer model to a whole new level.

Instead of just converting project-based fee into more predictable and regular revenue, you can package your service into a systematized, monthly product-like offering.

In a productized model, you offer a pre-set, packaged service for a flat monthly fee, similarly to the way many SaaS companies operate.

And just like SaaS companies, you get paid upfront for each month you work with a client.

In fact, many productized companies use Stripe or any other similar service to charge clients’ credit cards automatically each month.

No net 30 payment terms. No fuss. No delays.

Kudu.io is an excellent example of a productized service. The company offers monthly Adwords management packages, with prices depending on the ad spend budget.

Here’s another example. DesignPickle offers a productized design service for a monthly fee.

WPCurve, probably one of the most successful productized service agencies provides Wordpress support for a monthly fee.

#3. Collect HEFTY Deposits

Collecting deposits act as a guarantee of a future payment.

A deposit confirms a client’s commitment to the project and signals that they’re able to pay.

After all, as my friend, Calin Yablonski puts it:

"Without investing money in a project, clients can change or abort any project at any time. After all, what have they got to lose?"

But here’s the catch, I believe that often agencies charge deposits that aren’t high enough to warrant an on-time payment.

Look:

A client who’s paid you only 25% up front has really no incentive to part with the remainder of the cash. After all, it’s still a quite substantial amount of money.

But if you charge a heftier deposit, say, 50% or even 70%, they’re left with just a small chunk to pay.

And from their perspective, it’s not substantial enough to hold the payment or defer the money somewhere else.

So, if you’re uncomfortable with charging a monthly retainer fee or productizing your agency’s services, then consider increasing your deposit requirements significantly.

Collect at least half of the money upfront. This way you’ll also secure your business in case of a late payment.

A hefty deposit can provide you with a float of money that could get you through to the project’s completion.

The Creative Clinic, for example, charges a minimum of 50% of the project’s fee upfront.

#4. Run Credit Checks

FACT:

Running credit and payment checks could help you prevent many unpleasant cash flow problems.

And yes, I admit, this isn’t a strategy to trick clients into paying on time.

Instead, it’s a way to help you avoid working with clients known for late payments.

Companies like CreditHQ offer services that allow you to check how likely is a new client to pay you.

Feedback like this could help you assess whether you even want to work with a particular company. And if so, what sort of payment terms you’ll offer them.

If they’re known for being good payers, always settling their bills on time, you can work by your standard T&Cs.

Or offer stricter terms, retainers or milestone payment if they’re typically late with settling vendor invoices.

#5. Automate Payment Collection

Finally, you could use technology to your aid.

Applications like Freshbooks and Stripe, when integrated, allow sending invoices and processing payments directly from a client’s credit card at pre-scheduled intervals.

Sure, this strategy might not work for every client or project type. But if you work on retainer basis, require milestone payments or invoice at regular intervals, consider automating the client billing.

As a bonus, using automation will also free up your time from manual invoicing and payment processing.

A double win, if you ask me.

What about you?

Do you often suffer from late payments? What strategies do you employ to ensure clients pay you on time?

Share your experiences with us in the comments.