If You’re Running A Business, How Do You Get Paid?
These are tenuous times to be in business. As a small business, when things are great they’re great for everyone. But when they’re not great, sometimes it’s an interesting time getting paid so that we can pay others that we owe.
Obviously not all of us charge the same amount for services or products. In reality, not all of us bill the same way either. There are many options for billing, some of which you might not have considered. Let’s take a look at these, as something might pop out that you may want to consider.
First, there’s the straight up payment route – you provide service or product, you get paid immediately. This can be by cash or credit card, but you have your money fairly immediate and there’s no receivables or invoicing to deal with.
Second, you do invoicing. This means that you provide the service or product, send out an invoice or bill of some kind, and then you’re paid. Sometimes with this method you might try invoice discounting, where you offer a discount of some kind if you’re paid within a certain time limit. Believe it or not that works often even if the discount is only 10%. This term has different meanings in other countries but that’s what it means in the U.S.
Third, you do contract pricing. By that, I mean you set things up so that you’re paid either an hourly rate over an extended period or you charge a project rate where you’re factoring in different times where you need to be paid probably different amounts at varying stages of the project. That works on major or complicated projects.
Fourth, the most dangerous and, well, stupidest way to go, is to provide the service or product and not discuss price or when you’re going to be paid up front. I thought this was a no-brainer but I’ve met many small and independent business owners who are afraid of discussing money up front for fear that they won’t get business. Trust me; if you don’t get business by discussing money up front you won’t have a business or be able to pay your own bills on the back end.
How do you handle receiving money from the people you do work for, other than being an employee who gets paid weekly? And is your cash flow what you’re hoping it will be?