Asking a client to pay early?

15 replies
My clients are currently on net 30, however, net 30 sometimes turns into net 35-45. I'm really in a crunch and need to raise liquid capital. Is it wise to ask my customers to pay now (day 26 of the cycle) in exchange for X% discount on their retainer? Or would that be a bad idea?
#client #early #pay
  • Profile picture of the author Synnuh
    Let them know about a late fee if the invoice isn't taken care of by day 30. 1% per day -- then enforce it.

    What you're mentioning is a bad idea IMO. You're going to be showing your hand, and looking desperate -- something you never want to do in front of a client.

    Mention it to them for the next month, but I wouldn't call them today and let them know they can get a discount for paying early.

    I'd definitely send them a mail about late fees, though.
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  • Profile picture of the author netbroker
    If I not mistaken.. (certainly in the UK ) and if I have not misunderstood the thread. But can you not get the customers on a monthly standing order if it is monthly (ie) x amount comes out of there account into yours on a specific day each month... It is quiet easy to set up these days.... I would approach them and say that all payments are being made this way as from xxxx date..
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    • Profile picture of the author Eddie Wilson
      Originally Posted by netbroker View Post

      If I not mistaken.. (certainly in the UK ) and if I have not misunderstood the thread. But can you not get the customers on a monthly standing order if it is monthly (ie) x amount comes out of there account into yours on a specific day each month... It is quiet easy to set up these days.... I would approach them and say that all payments are being made this way as from xxxx date..
      This (I think it's called an electronic invoice here in Finland or something), or then just enforce a late payment fee/penalty. We've got laws that state we're allowed to impose penalties for paying late, in our company it states an 8% penalty in addition to the original sum if paid late.
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  • Profile picture of the author bizgrower
    Get new clients to pay ahead. ex. Pay on the first of June for the month of June. No payment, no service.
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  • Profile picture of the author KyleChapman
    offer them a 2/10 net 30 deal...
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  • Profile picture of the author RRG
    What's the old quote from Dan Kennedy?

    "Wealthy people get paid before they work; the poor get paid after they do work."
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  • Profile picture of the author laurencewins
    I get paid before I do any work. I don't have trouble with clients paying.
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  • Profile picture of the author fantrom
    Originally Posted by Tamara9182 View Post

    My clients are currently on net 30, however, net 30 sometimes turns into net 35-45. I'm really in a crunch and need to raise liquid capital. Is it wise to ask my customers to pay now (day 26 of the cycle) in exchange for X% discount on their retainer? Or would that be a bad idea?
    It's a bad idea to do it now and you will be giving up a lot of leverage to your client by announcing your desperation.

    This is something you offer in your contract before work begins--not after you finish.

    The best way to avoid late payments is not wait too long (5-7 days) after the 30 days to demand payment.
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    • Profile picture of the author Claude Whitacre
      Originally Posted by fantrom View Post

      The best way to avoid late payments is not wait too long (5-7 days) after the 30 days and demand payment.
      The best way to avoid late payments is to get paid up front.

      I've been doing that for years. No exceptions. If you get paid up front, you'll never have to demand anything.

      Like Bizgrower said, if you'r getting paid by the month, get paid at the beginning of the month (I use automatic credit card deductions), for the work you are doing that month. The card doesn't go through? I stop work, and they get a call.

      All this, "how do I get them to pay me less late?" talk is wrong. Now, you're begging. They will pay you up front, if you just tell them to.
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      • Profile picture of the author fantrom
        Originally Posted by Claude Whitacre View Post

        The best way to avoid late payments is to get paid up front.

        I've been doing that for years. No exceptions. If you get paid up front, you'll never have to demand anything.
        That all depends on your business and industry.

        Many clients I consult with work in industries that work on a 30/60/90 net (invoice) system. Many have an accounts payable and accounts receivable department that handles most of the process.

        - supermarket (food industry)
        - trade shows (install & dismantle)
        - restaurants

        and many others.

        Now I don't know what service/product he provided and if net 30 was even necessary.

        The small business clients (many just 1 person) that have come to me with this problem (net 30 but paid in 60 and even 90 days later) I have recommended that they inform their defaulting clients that in the future they will require a business credit card on file before any future service/product is provided.

        Now if invoice is not paid by the due date they can charge the credit card as specified in the contract. Many clients have even paid early thru the credit card on file.

        But I do agree that if you can be paid upfront that is the best option especially if you are an individual or small business that can't afford to wait 30 days. Then to compound the situation, have to chase people around to get paid.
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        • Profile picture of the author Claude Whitacre
          Originally Posted by fantrom View Post

          That all depends on your business and industry.
          .
          I'm sure that's true. I've always dealt with the CEO or owner. And it's never to a committee, never with proposals.

          Of course, there are companies that will only pay if billed by invoice, and pay in 30 days. but you can bill for what you re going to do, not what you've done.

          As a speaker, I've worked with large companies and organizations. I always get paid up front, before I arrive. There is usually a way. And I've worked with dozens of trade shows. I always get paid half at time of booking, and the other half when I arrive, before I go on. Only once did the CEO tell me, "I ran out of checks, you'll have to bill us". I did, and would never work for them again. I can't think of a company that pay everyone by invoice, on 30 days. They exist, I'm sure.

          In my retail business, we deal with schools, churches, companies. Some we give an invoice. And they send us a check. But they pay fast. Our rule is, the last invoice is paid, before another is created.

          Originally Posted by fantrom View Post

          But I do agree that if you can be paid upfront that is the best option especially if you are an individual or small business that can't afford to wait 30 days. Then to compound the situation, have to chase people around to get paid.
          I don't insist on getting paid up front, because I need the cash flow. I do it because I never want to have to go begging for money owed me. It changes the dynamic.

          Originally Posted by RRG View Post

          What's the old quote from Dan Kennedy?

          "Wealthy people get paid before they work; the poor get paid after they do work."

          That's a matter of positioning in consulting. Maybe the single most important thing I've ever learned from Kennedy. It isn't a matter of getting the money first, because you need the money., it's the positioning it gives you.
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  • Profile picture of the author bizgrower
    I think you can ease your immediate cash flow needs - without looking weak - by announcing to current clients that you are changing your payment process to the pay ahead model. I think make it voluntary for existing clients and required for new and returning clients. Hopefully enough current clients will switch to ease your situation. (Of course I don't know your contact terms, etc.)

    Another thing you can consider is a past customer reactivation campaign. Create an appropriate deal and call previous customers.
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  • Profile picture of the author Tamara9182
    Hi everyone,

    Thanks so much for all of your help and replies. I definitely don't want to seem weak in front of clients, but asking new clients to pay up front sounds like a great idea. My services are in the tech space.
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  • Profile picture of the author harryvent
    I am using the Apptivo Invoice app before 10 days send an Invoice with a discount offer for my client. They earlier pay an amount for Invoice it's like an offer provided to my client or consider as credit notes. Early payment everything stored in credit notes. Try to connect them.
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