The small business guide to getting paid faster in 2022

When you start your own business, you’re embarking on a journey to support yourself by doing something you truly love and gaining the freedom to chart your own course. But we know it isn’t always smooth sailing. One thing service-based small business owners have historically struggled with is getting paid on time—or paid at all.

With this in mind, we looked at payment data from the Wave invoices of US-based small business owners, and launched Macro Trends in Microbusiness: The Wave Report on Getting Paid 2021 to help you get on the right track when it comes to getting paid on time.

Microbusinesses are small businesses with under 10 employees. These businesses make up 92% of all businesses in the US and, on average, contribute to 38% of their owners’ household incomes.

With 4.3 Americans filing the paperwork to open their own business in 2020 (24% more compared to 2019), and the COVID-19 pandemic ushering in a whole host of changes and uncertainty, it’s more important than ever to empower small businesses with the knowledge of how to get paid on time going into 2022.

Download the full report below to get all the juicy details, or keep reading for an overview of how to get paid faster and set yourself up for success.

The impact of overdue invoices on small business owners getting paid

Our report shows that approximately 22% of digital invoices were overdue in 2021. When Wave asked 1,000 microbusiness owners in the US to share their experiences with late payments, we discovered that 70% wait one to six months to get paid, and 25% wait up to a year or don't get paid at all!

Constantly having to chase clients for late payments is incredibly frustrating—especially if it means you have to cover the expenses. This probably isn’t what you envisioned when you decided to work for yourself. So here are some ways you can avoid overdue invoices, increase how quickly you get paid, and focus more on what you do best: running your business.

Ways to get paid faster and defeat outstanding invoices

1. Enable digital payments

Allowing your customers to make online payments through a digital invoice means 15.4% more invoices will get paid on time. This means that not accepting credit cards and other online payment methods is actually costing your business money.

Relying only on checks or cash to get paid can create cash flow issues, accounting headaches, and a sub-par customer experience. Enabling online payments is a win-win: you can track your cash flow, be prepared for tax time, and make things easier for your customers and yourself.

2. Charge a late fee

First, check how much you can legally charge, since it depends on the country and state you’re in. Make sure to let your repeat customers and future customers know about the charge. Always spell out these terms in your contract and your invoice memo so your customers know.

3. Automate your processes

Set up automatic emails to remind your customers it’s time to pay, or that they have an overdue payment.

With Wave, you can send professional payment reminder emails to your customers that automatically get scheduled once you send an invoice with our online payments feature enabled.

You can also set up automatic payments with your repeat customers. With Wave, you can add your customer’s credit card information, so they’ll get automatically charged and you get paid on time, every time!

4. Use instant payouts

If you have regular payouts, that means you receive money through traditional banking methods. With instant payouts, your money goes through Visa or Plus enabled card networks, which means you can get paid almost instantly, even if banks are closed.

Pssst: if you’re using Wave to invoice your customers, you may be eligible for Instant Payouts.

5. Negotiate for shorter payment terms

Payment terms refer to the payment agreements you made with your customer, including timing. Even if you discussed payment terms with your customer, make sure they’re included at the top of your invoices as well.

You can decide whether you’re paid instantly, or within a set amount of days or months. You can look into what the standard ranges are for your industry, but don’t forget to consider your own cash flow needs.

The smallest businesses wait an average of over two months before their invoices are paid, which can cause major cash flow problems. If you have a customer that insists on paying after 90 days, don’t be afraid to negotiate.

6. Use a small business money management app

Thanks to payment technology designed for small businesses, it’s easier than ever to manage your business finances, even when you’re on the go.

Giancarlo Pawelec, an editorial commercial photographer based in Toronto, knows the struggle of steady cash flow. Pawelec credits Wave's digital payments, automatic reminders, and mobile app for making it easier to be paid on time:

Go out there and get paid

The struggle to get paid on time is real, but don’t fret!

Our study revealed that microbusiness owners are increasing the amount of invoices they send, a trend that started during the pandemic when more people started their own service-based businesses. The average value of invoices is also rising, with a 17.1% increase from 2019 to 2021, which means small business owners are getting paid on time more frequently, likely due to their owners leveraging more digital solutions.

While you ultimately don’t have control over what your client does, there are things you can do to set yourself up for success.

Wave's invoicing software saves microbusiness owners time and takes the stress out of getting paid. Create beautiful invoices and send automatic payment reminders today!