The FreeAgent Blog
Posted on 25 October 2018 by FreeAgent - Jump to comments
Looking for an alternative way to get your invoices paid? Here are five simple psychological tricks that might just give you the power to summon invoice payments from the most stubborn late payers.
1. Ask for a favour
This trick is also known as the Benjamin Franklin effect. The story goes that Franklin once asked to borrow a book from a man who didn’t like him and, as a result, the man soon became good friends with him. Of the incident, Franklin said: “He that has once done you a kindness will be more ready to do you another than he whom you yourself have obliged.”
Early on in the relationship with a new customer, ask them to do a favour for you. This could be something small, but it will encourage the client to view you as a friend. By asking a favour of someone they can’t help but rationalise that you trust them and that, as you must have been worth doing the favour for, they can trust you in return. When you’re trying to figure out how to convince a customer to make a payment this might just help get the ball rolling.
2. Use the client’s name
Dale Carnegie, author of the multi-million selling book “How to Win Friends and Influence People” strongly advocates for using people’s names to win them over and said “A person's name is to him or her the sweetest and most important sound in any language”.
Find out who is responsible for paying your invoice and call them by their name. Using a customer’s name on an invoice is probably more likely to get positive results than “dear sir/madam” or “to whom it may concern”.
3. Appeal to the late payer’s good nature
People hate feeling guilty, but if they haven’t paid your invoice, maybe they should be feeling guilty. You can prompt them by starting invoice reminder emails with a phrase like, “I need your help.”
How far you go with this depends on your situation. One FreeAgent customer even attached a picture of his hungry child to his payment reminders. The child wasn’t actually starving, but the image seemed to do the trick!
4. Prime the client for paying from the get-go
Invoices often come as a rude interruption for both parties and conversations about payment can be awkward if the invoice comes out of the blue. You can stop this from happening by setting up a funnel that reminds clients of the payment deadline throughout your correspondence.
In your first email after winning a contract with a new client, clearly set out your payment terms and note any interest you’ll charge or legal ramifications for non-payment. When the invoice is nearly due you should give the client a friendly heads-up that it’s on its way.
When you send the invoice, give another friendly reminder of the penalties for late payment and legal ramifications. Your first chasing email, if you have to send one, should be equally friendly and hint at charges. Your second reminder should ramp it up a bit with a warning about legal action.
5. Harness the power of nouns
Studies have found that using nouns that reinforce people’s sense of membership to a group can have a powerful effect. In one experiment a group was asked “how important is it to vote in tomorrow’s election” and another was asked “how important i is it to be a voter in tomorrow’s election?” Subjects who were given the “voters” question were found to be more inclined to vote the following day. The study concluded that this was likely to be because the noun “voter” reinforced their membership of a particular group and encouraged them to get involved.
When it comes to encouraging clients to pay your invoices, you could harness the power of nouns in your reminder emails. Instead of talking about “late payment”, refer to these customers as “late payers”. Their desire to not be part of this group might get them to send that invoice after all.
Hopefully these tips will help you understand more about how to get a customer to pay an invoice on time and get those late payers reaching for their wallets. Don’t forget that you can set up automated invoice reminders in FreeAgent so you don’t have to spend time chasing up clients.
Posted on 23 October 2018 by Ed Molyneux - Jump to comments
I’m delighted to let you know that we’ve taken our next major step in our mission to help small business owners navigate the UK’s forthcoming Making Tax Digital (MTD) legislation.
FreeAgent is already one of the suppliers on HMRC’s list of software ready to support MTD for VAT and now we’re also among the first handful of providers taking part in HMRC’s public pilot for MTD for VAT.
The new legislation will require VAT-registered businesses with a turnover of £85,000 or more to keep digital tax records and make submissions to HMRC using software from next April.
We’ve been working closely with HMRC to ensure we provide the best possible experience for customers who will be submitting VAT returns under MTD once the legislation comes into effect. If you're a FreeAgent customer, you’ll get a notification in our software to let you know the best time to sign up to HMRC's public pilot. If you're not using FreeAgent yet, why not take out a 30-day free trial and get MTD ready?
Still unsure what MTD means for you and your business? Don’t worry! We’ve created a library of helpful articles and resources about the legislation and how it could affect you - check it out here.
We’re excited to announce the launch of credit card bank feeds today, saving you even more time getting your accounts in order.
Powered by Yodlee, hundreds of new credit card feeds are now available, including all the major providers such as American Express, Barclaycard, Halifax and many more.
You enable credit card feeds just like any other bank feed. Select the Enable Bank Feed button when viewing your credit card account in FreeAgent and go through the setup process to enable the feed. Once in place, the feed will automatically import your credit card transactions into FreeAgent each day.
You can find more details about enabling bank feeds over on our Knowledge Base.
Until next time,
Roan and the team at FreeAgent
Posted on 10 October 2018 by Adrian Mather - Jump to comments
Running a small business can be a life-changing experience that enables many people to follow their passion and take control of their destiny. But it’s not always easy - our customers tell us that owning a business can also be a stressful affair, fraught with challenges that can take a toll on their mental and emotional wellbeing. As it’s World Mental Health Day, we’ve taken the findings from some of our recent customer surveys to shed light on the biggest issues affecting small business owners today.
1. The hours can be long
It’s no secret that small business owners work incredibly hard, but it’s still surprising to see just how many hours they work. In our latest small business survey, we found that more than a third (38%) of respondents said they spent more time on their business than the maximum of 48 hours per week set by the EU’s Working Time Directive. In addition, one in 14 respondents (7%) said that they spent more than 64 hours working on their business in a typical week.
With so many hours spent working, these incredibly hard-working small business owners are unlikely to have any time left to tackle other tasks, spend time with their friends and family or even recharge their batteries.
2. Many small business owners don’t take holidays
At the start of the year, we asked small business owners how much holiday time they expected to take in 2018. We found that just a quarter (27%) said they would take five weeks or more. Meanwhile, 11% admitted that they would take less than a week of holiday or even have no holiday time at all in 2018.
With the statutory holiday entitlement enjoyed by those in employment simply not available to small business owners and freelancers, it seems that many are choosing not to take a break from the daily grind.
3. Running a business can be lonely
70% of our survey respondents told us they worked from home, with only 6% choosing to work in dedicated co-working premises. For solo workers, the risk of feeling isolated can be much higher than it can for those working in a bustling office environment and, sadly, more than half (57%) of people surveyed said that they had felt isolated or lonely as a result of self-employment. This may explain why nearly three quarters (73%) of respondents said that they had felt that either their mental or physical health had been put under strain at some point.
Some positive insights
These stats may appear to paint a pretty grim picture of self-employment, but despite the challenges, most small business owners are very positive about their situation. An overwhelming 81% of business owners said that they would recommend self-employment as a career to others and nearly two thirds (60%) said that they thought that their mental health had, in fact, improved as a result of running their own business.
Running a small business can be challenging and rewarding in equal measure, and it’s important to take care of yourself as you navigate its many ups and downs. There’s a wide range of support and resources available from organisations such as Mind and Heads Together.
FreeAgent can help take some of the stress out of running your small business by helping you nail the daily admin and relax about tax. Find out more.
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- 5 simple mind tricks to help get your invoices paid on time