5 strategies for getting clients to pay on time

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When late payments are the rule and not the exception, the stability of your agency is at risk. Find out how to maintain cash flow with our five tips for getting clients to pay on time, every time.

A recent Chaser study finds that 87% of businesses report that their invoices get paid after the due date.

If you don’t have a system for ensuring clients pay you on time, you’re limiting your growth and sacrificing almost half your revenue. Late payments are frustrating but don’t take it personally. Your agency’s service is just one of the dozens of expenses your clients must keep track of.

Agencies get paid after the work is delivered, so clients don’t have much incentive to pay a bill the minute it’s received. Many will put off a bill or forget about it altogether while your bottom line suffers. 

But this doesn’t mean you’ll be stuck chasing late payments forever. Below, we’ll explore five billing practices that will position your agency for growth.

1. Establish clear and transparent payment terms

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Clear and transparent payment terms are the cornerstone of your billing system. You need to ensure that clients know what to expect from you and when they can expect it. If you aren’t careful with your payment terms, they can lead to mismatched expectations at best and a ruined relationship at worst.

Items that should be included in your payment terms

A contract can be an agency’s kryptonite if it’s not written and understood correctly. Cover everything that might go wrong, and ensure you get paid for every hour worked — even in extenuating circumstances. To eliminate opportunities for miscommunication, your contract should include:

Services your agency is providing

Include an overview and scope of each service you’re offering so that clients know what they’re paying for. If you include aStatement of Work (SOW) that further explains deliverables and timelines, you should reference it here.

Cost of services

If you charge hourly, break that cost down. If you’re offering an estimate, price adjustments and the process for making them should be expressed here.

Payment logistics

Make it clear when clients will get invoices and how much time they’ll have to pay them. Also, be sure to note all acceptable payment options.

Late payment penalties

Use a late fee as a way to incentivize clients to pay on time. Most agencies charge between 1% and 1.5% — just enough to encourage payment but not enough to aggravate clients when mistakes are made. 

Nonpayment penalties

Include a timeframe (typically two months) for the client to make a payment before you discontinue work.

How terminated projects are handled

Make it clear how much notice you need and how much you should be compensated for.

Pro tip: Take the time to go over your contract with your client

Simply sending out a contract isn’t enough. Review the contract with your client, explain the terms, and answer any questions they may have so they understand what they’re agreeing to pay for. This ensures everyone is on the same page and prevents misunderstandings that could lead to a late payment.

2. Streamline the invoice process

The beauty of a well-crafted invoice is that it can do the heavy lifting for you. Think of it as a reinforcement of the most important parts of your contract. Break down tasks, hours, and costs so there’s no dispute about what the client is being charged for. 

Professional, accurate, and detailed invoices increase customer satisfaction and streamline payment, so you’ll spend less time chasing payments and more time on billable projects.

Ways to streamline the invoice process

Every extra step you can take to make the invoice process easier and smoother for clients will go a long way in getting paid faster. Use these strategies to add urgency to your invoices:

Add a due date

Due dates remind clients there’s a finite window to make payments. It will prompt them to make the payment immediately instead of waiting for a reminder email or ignoring it. Specify the exact date when payment is due instead of the general phrasing “due upon receipt.”

Include a late payment penalty

Financial penalties for late payment give clients the nudge to pay their invoices on time. A good rule of thumb is to charge between 1% and 1.5%. The goal is to incentivize clients to pay on time, not drive them away. Ensure the penalty is outlined in your contract and stated clearly on invoices.

Only send the invoice to one recipient

Unnecessary CCs or BCCs could slow down the payment process. Send your invoice to one contact stipulated in the contract so only one person owns the bill.

Offer several payment options

Give clients several payment methods so they can pay using the option easiest for them. Credit cards, bank transfers, checks, PayPal, and cash (for local clients) are all viable options. Offer them the option to switch payment options in every invoice if they decide another option works better for their workflow.

Pro tip: Include a 2% discount for clients who pay within two days of the due date

A little incentive can go a long way! A 2% discount is small enough and won’t cut deep into your profit margins but is large enough to incentivize on-time payments.

3. Offer and encourage clients to set up automatic payments

Most of your clients aren’t missing your bills on purpose — they’re thinking about a dozen other things. It’s hard to remember to log in on the same day every month or at the end of every project. Set up auto-pay for your clients to automatically transfer payment from their bank account. This will spare them the hassle of having to log in every month and spare you the awkward money conversation with a valuable client.

Benefits of automatic payments

Setting up automatic payments is a win-win situation for both parties. Some benefits you reap include:

No more chasing payments

Automatic payments are on time, every time. You don’t have to worry about checking in with clients and sending follow-up emails. Autopay eliminates late invoices and reduces your workload, letting you focus on core business tasks.

Keeps your cash flow steady

You know exactly when money will be in your account, which makes budgeting and cash flow management easier. This comes with greater financial security for your business.

Better customer relationships

Automation takes away any awkward conversations about late payments. Reminder emails are often a source of tension, so taking them out of the equation and instead offering a more pleasant (and less time-consuming) alternative is always welcome. Your clients will appreciate the convenience of auto-pay, and you’ll have more time to nurture relationships.

Pro tip: Create a webpage for clients to view their up-to-date payment information

Instead of sending out emails with payment reminders, create a page where clients can log in and view past, current, and future payments. This way, clients can track their bills and ensure they’re paid on time. You can also include helpful tips about setting up auto-pay and an FAQ section to provide more details about the payment process.

4. Move clients to a retainer agreement

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If you have recurring clientele – clients who require services or products regularly and at the same time monthly, quarterly, or yearly – consider moving them to aretainer agreement. This is an agreement where your clients pay an upfront payment for the services you’ll provide over a certain period. Creating early payment incentives like a 5% discount will encourage clients to pay on time and in full since they know exactly what your services will cost them.

It helps to understand how retainer agreements work and why they are a feasible solution for both parties.

In theory, a lot of security comes with retainers for clients and agencies. The agency gets paid before any work is done, eliminating the possibility of not being compensated for their efforts, and the client knows exactly how many hours of work a project will take, eliminating any confusion surrounding the scope of a project.

In practice, however, clients are wary of retainers, believing they’re contracts that favor agencies. Most retainers have a “use it or lose it” policy, so clients fear that they’ll be paying for more than they’re getting. And it’s a valid concern — as you work through several iterations, the scope of a project can change. Your clients might ask you to put in extra hours, or you might finish ahead of schedule.

That’s why it’s important to be transparent with your clients and explain the benefits of a retainer agreement. Show them that it provides more security and flexibility, as they’ll be able to make changes to the scope of a project without worrying about extra fees.

Items to include in your retainer agreement

The great thing about a retainer agreement is it gives you both (you and your client) visibility. You know exactly when you’ll get paid, and your client understands the services they’re getting in return. This sets expectations for the working relationship and encourages long-term relationships. To get buy-in from your clients, ensure you include the following items in your retainer agreement:

A brief about the services

Provide a detailed brief about the services you’ll be providing to your client. This will include milestones, timelines, payment schedules, and any other specifics they need to know.

Pay rate and method of compensation

Specify how you’ll be compensated for your services and the pay rate. Are you charging an hourly rate or a per-project basis? Will you be compensated in full upfront or in installments?

Dispute resolution

A dispute resolution procedure outlines how to address any disputes that the client may have with your services. This is critical for transparency and accountability and protects you in case of legal action.


A retainer agreement becomes legally binding when both parties sign it. Include a signature section at the end of the document so both parties can officially agree to the terms of the agreement.

Pro tip: Be transparent on how you track hours worked

Transparency is critical with retainer agreements. Since you’ll be getting paid upfront, your clients must know how you track your hours. Aside from setting expectations, it ensures clients get the most out of their money. You can use time tracking software to keep a detailed log of the hours you’ve worked on their projects.

5. Build strong relationships with your clients

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Healthy, happy client relationships lay the foundation for successful, on-time payments. Show your clients you care and that they’re more than just a number.

That means being available to answer their questions, addressing their concerns, and offering help when needed. Make it easy for them to get in touch with you, whether through email or phone calls.

Most importantly, provide exceptional services. Your clients count on you to help them succeed, which means delivering work that meets and exceeds their expectations. If you consistently do a good job, they’ll be more inclined to pay on time. They will always prioritize your invoice because they know there’s value in your services.

Learn how to strengthen client relationships and build a strong rapport in this guide

How to keep your client relationship in order

Want to keep your client relationships strong? Here are some tips to make it happen.

Communicate effectively and consistently

Be proactive and keep communication lines open. Check in with your clients regularly to provide updates on their projects, address any questions or concerns, and provide helpful feedback. Schedule weekly calls, set up a Slack channel for discussion, or drop them an email.

Share your knowledge

Your clients rely on your expertise. Share insights, provide helpful resources, and keep them informed of new trends in the industry. This will help build trust and further demonstrate the value of your services.

Exceed expectations

Go the extra mile and exceed your clients’ expectations. Propose new ideas or solutions, think of creative ways to optimize their processes, and be proactive about finding solutions. Show them you’re invested in their success — not just getting paid.

Understand your client’s goals

Each client is unique and has different goals and objectives. Take time to understand their needs and provide creative solutions to help them reach their goals. Create an action plan that explicitly outlines what you’ll be doing and how it will help them achieve their objectives.

Ask for feedback

Feedback loops provide valuable insights that can help you improve your services. Ask for feedback regularly so you know what areas to focus on or refine. The goal is to ensure your clients are satisfied with your services.

Pro tip: Be proactive with client reporting so discussing payments is not a challenge

Client reporting helps keep clients in the loop on their projects. Show them what tasks you’ve completed, provide insights into current and upcoming work, and be proactive about discussing progress. This way, when it comes time to discuss payments, you’ll have a clear record of your services. 

When you use powerful project management software like Teamwork, you can create robust reports and generate comprehensive analytics. You can also leverage software integrations and reporting templates so you can provide your clients with detailed insights.

Use clear communication for on-time payments

The old saying goes: Time is money, and getting paid on time is a critical part of keeping your agency running smoothly. Unfortunately, many agencies spend hours setting prices for their services but not nearly enough time setting up systems and practices that encourage timely payment. 

Establish clear communication with your clients to encourage timely payments and keep your cash flow healthy. Set expectations early, create detailed retainer agreements, and be proactive about client reporting so you’re always paid on time! 

Teamwork.com’s project management and collaboration tools make it easy for agencies to stay on top of projects and client communication. With Teamwork.com, you can spend more time doing what you do best — serving up high-quality deliverables. 

Sign up for a free trial to see how Teamwork.com can streamline your billing and invoicing.

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