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How to set up automatic payments for your business
One of the biggest struggles that freelancers continue to face is the ever-frustrating overdue invoice. It’s a more prevalent issue than you might think: a shocking 58% of freelancers have come across a situation where they haven’t been paid for their work. What’s more, here at Bonsai we recently found that 29% of freelancers’ invoices are paid late.
With statistics like those, there’s a high chance that you’ve also faced an unpaid invoice or two in your freelancing life. There are several things you can do to help make sure you get paid on time - like learning how to invoice professionally or knowing how to attract better clients in the first place - but one of the most important things you can do as a freelancer is to understand how to set up automatic payments for your business.
3 reasons why you should set up automatic payments
You’re reading this article, so chances are you already have a reasonably good idea of the benefits of recurring payments. However, let’s take a look at the top three reasons why learning how to set up automatic payments for your business will make your life as a freelancer so much easier.
1. They save you time
Setting up automatic payments for your freelancing business will take some time in the beginning. You will need to figure out which of your clients can be invoiced regularly, set up your invoices so they can be paid easily (more on that later), and touch base with your clients to let them know about your new invoicing method.
In the long run, however, automating your invoicing will save you a lot of time. The hours you spend each month writing invoices, chasing them up and sending receipts to clients can instead be spent doing the work you love. You’ll only have to alter your invoices if there are changes in your payment schedule or amount. (Plus Bonsai’s simple freelance invoicing tool can help you create professional-looking invoices in minutes)
2. They lead to better cash flow
Nothing is worse for a businesses’ cash flow than late payments - except maybe payments that don’t come at all. After all, as a business owner, you have your own invoices and bills to pay, not to mention yourself. A 2017 study found that 79% of small business owners can’t pay themselves when their invoices aren’t paid on time.
Setting up automatic payments for your business will help you decrease those late payments and ensures that money is flowing into your account each payment cycle, so you’ll have a more solid understanding of your cash flow situation.
3. They help you have a better relationship with your clients
The freelancer-client relationship can be a tricky one, especially when you throw late payment fees or passive aggressive emails in the mix. Setting up automatic payments can help you avoid those awkward conversations with your clients, so you can both focus on the work at hand instead.
Best of all, your clients will probably welcome the automatic billing. They’re just as busy as you, and setting up an automatic payment means it’s one less bill they have to remember.
First, understand retainer contracts
Not all contracts are suitable for automatic payments. If you’re a freelancer who typically works with clients on one-off projects (like a web designer who builds a website, gets paid and then moves on to another project), automatic billing won’t work with your business structure.
Consultants, graphic designers and content writers are just some examples of service-based freelancers who operate under retainer contracts. Essentially, if you are charging your client a set fee for your services on a weekly or monthly basis, you’re using a retainer contract method.
Retainer contracts are like a monthly subscription for your business. Double Your Freelancing sums it up well: “The definition of a retainer is, not surprisingly, an agreement where one party (the client) retains the accessibility and use of another party (you, the freelancer) on an ongoing basis.”
Retainer contracts are best for setting up automatic payments as they involve a set fee that occurs on a regular basis - usually once per month, but sometimes weekly or biweekly. Think about your business model. Do you have retainer contracts, or maybe even clients you work with frequently that you could approach about a retainer contract? If the answer is yes, learning how to set up automatic payments for your business is a great next step.
How to set up automatic payments: best practices
As the #1 Freelance Product Suite, Bonsai is always looking for new ways to improve its products to meet the needs of freelancers everywhere. One of our latest products is our recurring payments tool, allowing freelancers like you to set up your retainer invoice for easy, effortless automatic payments.
We designed our recurring payments tool and its useful features with all of the best practices for recurring payments in mind. Here are some of the things you should consider when setting up automatic payments for your freelancing business.
1. Allow for multiple payment methods
This tip is a golden rule of invoicing and is one you should remember even if you’re not interested in finding out how to set up automatic payments for your business. One of the simplest things you can do to ensure your invoices get paid on time is to make sure they’re as easy as possible for your clients to pay.
Not everyone likes to pay by bank transfer, and you may not have a PayPal account ready and able to receive client payments. It’s important to set up your invoice so that your clients can pay in a way that works for both them and you. For example, Bonsai’s freelance invoice feature allows you to accept payment by credit card, bank transfer, PayPal and even bitcoin.
2. Figure out the right currency
Another way to make sure your invoices are easy to pay is to write them in a currency that makes sense to the situation. If you’re a freelancer in Canada sending an invoice to a client in Europe, it might not make sense to send an invoice in US dollars. When establishing your contract, find out what currency your client wants to be billed in and make sure that’s reflected on your invoice.
(PS: Bonsai allows you to accept payment in 180 different currencies)
3. Auto-generate your invoices
Chances are you didn’t become a freelancer so you could spend hours writing invoices each month. With Bonsai, you simply have to upload your retainer contract details to the system and we’ll auto-generate a recurring invoice for you. You only have to input the information once (or whenever your agreement changes, like when you increase your rate) and we’ll take care of the rest. Just sit back, relax, and let the payments come to you. We even have a built-in reporting tool that allows you to see just how much you’re earning.
Ready to automate your payments?
Automating your business’ payments is a win-win. Your clients are happier because they don’t have to remember to pay you when they’re busy in meetings or on holiday, and you get to spend less time on the admin side of your business and more time doing what you love.
If you’re ready to start using automatic payments in your business, Bonsai will make it quick and easy for you. Sign up for a free trial now.