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How to make getting paid easy (and pleasurable) for you and your clients.

Hey there,

One big thing that stops business owners taking proper breaks is worrying about cashflow while they’re away. Especially as most are wary of sharing financial data with their team.

Money might be due in from customers or clients, but will it actually come in if I’m not there to chase it?

Bills might fall due. What if I’m not there to make sure it’s paid?

The answer to both these worries is to make sure you don’t have to be there to take care of them.

That doesn’t have to mean handing over responsibility to your team. It does mean putting process in place.

So in this newsletter I’m going to talk about how you can:

Make sure what you charge is enough to create room for breaks
Make payment part of the process
Make payment part of the service.

Let's dive in.

Make sure what you charge is enough to create room for breaks

Price is definitely part of your marketing. Whether we say “Cheap and cheerful” or “You get what you pay for” or “Because I’m worth it”, price is part of the story we tell ourselves when we choose what to buy.

Price also a key part of your operations. It’s critical to your ability to build capacity in your business.

Without some slack on the money front, it’s harder to take on new team members, or even new clients, and it’s nigh on impossible to take yourself out of your business if there’s no money to spare for a holiday.

So it pays to review your prices as part of preparing to take time away from your business.

Here are 2 questions to ask:

1) How much does it cost you to deliver on your Promise?

You want to be sure of making a profit on each and every sale.

To do this, work this out on a per package basis, and remember to attribute a share of everything you would normally dump in ‘overhead’. Here’s an earlier newsletter with a detailed example of how to go about this.

You might be surprised at the difference this makes to your costs, and therefore the profit you actually make.

But once you know, you can adjust your prices accordingly.

2) How much do you want your business to earn?

What annual turnover does the business need to make in order to cover all it’s costs (including you, and including tax)?

What annual turnover does the business need to make in order to cover all it’s costs AND give you room to do more - expand your team, expand your client base and take time off?

These two figures give you a range you can use to assess performance. Divide it by 12 to give a monthly range.

As long as you’re within that range (or above it) every month, you know you’re doing OK.

Once you have accurate values for the profit you make on each package you sell, plus your target turnover you can start to plan what quantity and mix of packages is going to make it easier to hit your target.

Here are a few other ways you can use price to help manage operations:

Price can be a flow control mechanism. If you’re inundated with clients, putting your price up will slow demand.

Conversely, if you know you have pent-up demand AND spare capacity, lowering your price can bring a rush of clients in.

A low price can help to enrol early adopters, but make sure they know it’s a special deal for them. Never go lower than break-even. And make sure they’ll rave about it afterwards.

Remember

Pricing is about finding the the right balance between what you need to earn and what represents value to the people you serve. You should both profit from the deal.
As long as you’re charging more than it costs you to Keep your Promise you have the potential to be profitable.
Keeping your Promise enough times per year to make the living you want is what planning is all about.
If you’re not enrolling enough clients, you’re more likely to be underexplaining the value than overpricing it.
If you get it wrong the first time, you can always put your price up for the next new client.

Want someone to bounce off around these ideas?

Feel free to book a quick chat to explore how I can help.

Make payment part of the process

It doesn’t always feel like it, but in essence any business consists of a single end-to-end process of sharing it’s Promise of Value with whoever wants to hear it, then keeping that Promise for whoever has signed up for it.

Once a customer or client signs up, they’ve agreed to pay you money in exchange.

Which means taking payment is part of the process of keeping your promise.

And it should just happen, without fuss, without angst and certainly without guilt on your part.

Here are some tips for designing how that should look for you:

Separate what they pay, from how they pay.

If you’re asking for commitment to a year’s programme, with the ability to pay in instalments make it clear that this is a payment plan, not a subscription.

You can break payment up in whatever way suits you and your client. For some businesses that’s weekly, I like monthly. For others payment can be tied to specific stages of delivery. Which might even mean different payment amounts at different stages.

Start taking payment as soon as you start.

Send your first invoice as soon as they say yes. Don’t wait until you’ve done the work.

Sending the first invoice immediately gives it time to get through whatever ‘system’ the client has in place, so there is no excuse for it to be paid late. You could even find out who handles invoices at your client’s business, then ring them up to find out who you should send it to, and when is the best time to do so.

I always recommend taking a payment at the beginning of your work together.

It’s understandable that people are reluctant to pay for something they haven’t yet received, but that’s no reason you should give everything before you get paid.

As a compromise, I like to arrange payment for the middle of the month. That way we both have skin in the game.

Set payment terms that suit you.

7 days is perfectly reasonable. Just because everyone else does 30 days, doesn’t mean you have to.

Automate as much as possible

However you take payment for your services, make the process as automatic as possible.

Use repeating invoices for regular payments, so you only have to set things up once.

If payment amounts vary over the programme, you can set up individual invoices upfront and schedule them to be sent with an app like ‘Invoice Away’ (free for up to 30 invoices a month). https://invoiceaway.io/

Sign yourself and your clients up to a direct debit service, so that even one-off invoices are simply paid on the due date.

You pay a small percentage of the invoice value for this service, but that cost is more than offset by the positive effect on your cashflow and the time you save chasing.

It also means that all your conversations with clients can be about the value you are creating together.

Do as you would be done by

Automate payments out to your suppliers too. Maybe even pay them sooner than their terms state. It will help to keep you accountable for hitting your turnover target, and if you ever need to ask them a favour, it will help that you’ve treated them well.

Want help doing any of this?

Feel free to book a quick chat to explore how it might work for you.

Make payment part of the service.

Let me tell you a true story:

Years ago I worked in Leicester Square. In my lunch hours I discovered London’s fashion and textile district - Berwick Street with it’s fabric shops and showgirl trimmings, Newman, Berners and Margaret Streets, home to showrooms for Sanderson, Cole and Son and the like. And most wonderfully for me, RD Franks - a bookshop.

RD Franks was full of the most mouth-wateringly stylish books and magazines about textile and fashion history, design and techniques. It became my favourite lunch hour haunt. Multiple national editions of Vogue, books on theatre costume design, books on fashion design and designers, books on industrial manufacturing techniques.

And some beautiful monographs on Dior, Balenciaga, Vionnet sealed up in cellophane wrappers.

I bought the Dior one first, after weeks of coveting and agonising in case someone else got there first.

I vividly remember the butterflies in my stomach as I handed over the cash. A lot of cash. Almost a day’s wages.

Would it be worth it? Would I regret it? What were the other people in the shop thinking of me as the assistant handed it to me, here in this ‘insider’ shop, catering to the trade?

They were oblivious of course, but for me, this wasn’t just buying a book. This was buying a sort of initiation into the world of fashion designers and insiders, the people who go deeper than the weekly magazines or even Vogue.

Handing over all that money was an essential part of the experience. One I remember with pleasure to this day.

Of course it’s much easier to do this in retail, where you literally exchange money for something tangible.

But, if like many small businesses, you see payment as just a bit of admin you’d rather put off, not only are you depriving yourself of secure cashflow, you’re also depriving your client of the chance to relive the reasons why they agreed to buy from you in the first place. Diminishing their experience and in the process, subtly de-valuing what you’ve done for them.

So, as well as thinking through your pricing, offering payment plans and automating getting paid as much as possible, I think it’s well worth putting some effort into making payment part of the customer experience.

Especially if what you deliver is more or less intangible.

Most of the tools you might use to automate payments allow you to customise invoices and emails. So if you can, use that customisability to remind your client of the value they are receiving in return for their money.

For example you could:

Itemise what you’ve done, or all the ideas and actions you’ve generated together since the last time.

Then show them what that means for them:

how much money you’ve saved them.
how much money you’ve made them.
how much time you’ve saved them.
how much time you’ve created for them.

Maybe even ask them for some feedback on how they’re feeling:

Are they sleeping better?
Do they have more energy?
Do they feel more positive about their team and their business?

You’d need to take a baseline at the start of your work together of course.

But that’s no bad thing. We humans are very good at seeing all the difficulties ahead. Not so good at looking back and seeing how far we’ve come.

With all the mechanics of payment automated, you now have time to introduce some really useful humanity to the process. And it won’t just remind the client of the value you bring, it will remind you too.

Intrigued by any of these ideas? Why not book a quick chat to explore how they might work for you.

That’s it.

Here’s what you learned today:

With today’s technology, automating invoicing and payments is an easy way to reduce any worry about cashflow while you take a break.
Automation isn’t just about saving time or money. You can use it to free up time to make your service more human, not less, and to remind yourself and your clients that your relationship is really about value.
No amount of automation will help if you simply aren’t charging enough.

So, take a look at your pricing. Are you charging enough to create space in your business for breaks or growth, or even both?

Take a look at how you’re invoicing. Are you making the most of your accounting software and apps that connect to it? What could you do to take yourself out of the loop and make getting paid on time just happen?

And if you already have invoicing and payments working away like clockwork, in the background, what could you be doing to remind clients of the value you bring, every time they pay?

Thanks for reading!