Do you get full payment upfront when working with local businesses?

by banwork 26 replies
Most companies I know in Sarasota that do online services either get 50% upfront and 50% when the project is complete or they take full payment after the job is done. I see a few people in here that were burned locally by trying to collect after they already did the work.

I have always had a different mindset because of how much dishonesty I have seen in my life mostly as a police officer. I figured I was better off accepting less business by charging 100% before I did any work. I accepted 50/50 payments occasionally when I started but now I never accept anything except full payment prior to me doing anything. If someone asks why, I tell them because that's because people trust me and I trust other people. I tell them everyone always pays me upfront and that is the only way I do business.

What I can't tell is if I have ever lost good business because of this? People that are trustworthy tend to not have a problem paying upfront. Usually it is the same people that are so paranoid about getting burned that they end up being the same ones that do not pay their own share. Their guilty conscience comes off even via email through their demands to not pay all upfront. However, this has been about 1% of the total and worked out well in that I most likely scared off the people who would have not paid.

My question is do you charge 100% upfront? If not, why not and how do you do it? If so, what experience have you had with explaining to people why you charge 100% upfront?
#offline marketing #businesses #full #local #payment #upfront #working
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  • Profile picture of the author kenmichaels
    If they were sold on you and your product, then they are/were sold on paying upfront.

    Any deals you might have lost ... was not because of payment options (or lack thereof )

    Rest easy, your doing it right. The only thing I see that can be an issue is when you
    say some ask why they have to pay upfront. I have never been asked that question.

    Never.

    So that suggests to me your leaving them or leading them to ask that question.
    If I am correct you should figure out how ... and remove it from your pitch.
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  • Profile picture of the author Peter Lessard
    I have been getting paid upfront now for more than 10 years. Never even met most of my clients except over the phone/email/skype. Many are in different countries. Sums are often substantial. I have had questions about it. I do the following to alleviate their concerns. Have a real company that can be verified. Provide as many references as they would like that they can actually call/email and explain that so much work for us is loaded up front that we must charge upfront.

    My own custom software that I have built to run my business actually polices that a project is funded from its own funds.

    As an aside I did not do this because of lack of trust but because as a custom software developer and consultant to all types of businesses for years I watched many good businesses go under or suffer great hardships while they were owed tons of money that was 30 days past due.

    I can spot from a mile away if there is real potential for a deal with someone and I can't remember in a decade a deal that I thought was legit blowing up because of payment terms.
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  • Profile picture of the author Mwind076
    Do you get full payment upfront when dealing with local businesses? Yes, we get full payment from ANY customer, and we have customers all over the globe.

    What I can't tell is if I have ever lost good business because of this?
    No, you haven't. Those that are serious, have a good understanding of business and are ready to move and work with you and will work WELL with you will pay you upfront.

    My question is do you charge 100% upfront?
    Yes (again)

    If not, why not and how do you do it?
    NA

    If so, what experience have you had with explaining to people why you charge 100% upfront?
    We don't explain, we tell them what we need from them to start (list, script, payment), we tell them how much their service will cost them (we do cold calling, consulting, training so it varies), and we tell them how to pay. If they are serious, they get payment to us immediately, if not, they hem and haw and ask why. Our answer is "because we take payment before we do any work, it's our policy." Simple as that. If they don't like it, they are free to move on, and most of the time I will tell them we cannot accommodate them after XX days (usually the end of that week) if they do not want to pay. That frees us of having to deal with a difficult customer.

    I will admit that it's HARD to be strict and not take payment at first, but once you have set customers, it gets easier. We aren't missing out on anything that isn't good for us, we have our clients that sign on for months at a time, so it's not an issue.
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    • Profile picture of the author Trent Brownrigg
      For the most part my company (Be Always Marketing) gets full payment upfront for almost all services we provide and that has rarely ever been an issue. However, on occasion we will take 50% up front and the remaining 50% upon completion when it comes to website design.
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      • Profile picture of the author banwork
        Originally Posted by kenmichaels View Post

        If they were sold on you and your product, then they are/were sold on paying upfront.

        Any deals you might have lost ... was not because of payment options (or lack thereof )

        Rest easy, your doing it right. The only thing I see that can be an issue is when you
        say some ask why they have to pay upfront. I have never been asked that question.

        Never.

        So that suggests to me your leaving them or leading them to ask that question.
        If I am correct you should figure out how ... and remove it from your pitch.
        Thank you for sharing your positive feedback with me!

        Originally Posted by plessard View Post

        I have been getting paid upfront now for more than 10 years. Never even met most of my clients except over the phone/email/skype. Many are in different countries. Sums are often substantial. I have had questions about it. I do the following to alleviate their concerns. Have a real company that can be verified. Provide as many references as they would like that they can actually call/email and explain that so much work for us is loaded up front that we must charge upfront.

        My own custom software that I have built to run my business actually polices that a project is funded from its own funds.

        As an aside I did not do this because of lack of trust but because as a custom software developer and consultant to all types of businesses for years I watched many good businesses go under or suffer great hardships while they were owed tons of money that was 30 days past due.

        I can spot from a mile away if there is real potential for a deal with someone and I can't remember in a decade a deal that I thought was legit blowing up because of payment terms.
        Yes upfront payment seems to encourage people to weed themselves out early in this process. Still, I made this post because a lot of people and businesses still are not charging upfront for their services online. The way current payment processing systems like PayPal work, it seems you have to pay upfront.

        Originally Posted by Mwind076 View Post

        Do you get full payment upfront when dealing with local businesses? Yes, we get full payment from ANY customer, and we have customers all over the globe.

        What I can't tell is if I have ever lost good business because of this?
        No, you haven't. Those that are serious, have a good understanding of business and are ready to move and work with you and will work WELL with you will pay you upfront.

        My question is do you charge 100% upfront?
        Yes (again)

        If not, why not and how do you do it?
        NA

        If so, what experience have you had with explaining to people why you charge 100% upfront?
        We don't explain, we tell them what we need from them to start (list, script, payment), we tell them how much their service will cost them (we do cold calling, consulting, training so it varies), and we tell them how to pay. If they are serious, they get payment to us immediately, if not, they hem and haw and ask why. Our answer is "because we take payment before we do any work, it's our policy." Simple as that. If they don't like it, they are free to move on, and most of the time I will tell them we cannot accommodate them after XX days (usually the end of that week) if they do not want to pay. That frees us of having to deal with a difficult customer.

        I will admit that it's HARD to be strict and not take payment at first, but once you have set customers, it gets easier. We aren't missing out on anything that isn't good for us, we have our clients that sign on for months at a time, so it's not an issue.
        You make a good point about getting started and having to get that confidence. I had the same issue starting out and can always tell a newcomer to online business by their willingness to not take payments upfront. Thank you for answering my questions in such detail!

        Originally Posted by Trent Brownrigg View Post

        For the most part my company (Be Always Marketing) gets full payment upfront for almost all services we provide and that has rarely ever been an issue. However, on occasion we will take 50% up front and the remaining 50% upon completion when it comes to website design.
        I know a web design company locally that does this too. I feel like web design is a reasonable area to bill like this since you can take their website down if they don't pay that 50% at the end. If a client was paying with a wire transfer, I might be open to this option but not if they are using PayPal since they already can use a dispute to get their money back after paying 100% upfront.
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  • Profile picture of the author amenwolf
    50 / 50... Learnt my lesson the hard way,

    Had a few who just ran away or kept on delaying payments.
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    • Profile picture of the author banwork
      Originally Posted by amenwolf View Post

      50 / 50... Learnt my lesson the hard way,

      Had a few who just ran away or kept on delaying payments.
      You always do 50/50 for ordering from someone else or from doing the work yourself?
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  • Profile picture of the author partyfavor
    Great and timely thread

    I'm in the nightlife business. Marketing coach, developing promotions, managing ads and social media best practices etc.

    In this biz, every owner wants to sign up but pay later, and recently it's getting really bad trying to collect. I've converted many clients to upfront pay or credit card on file (at least if I charge week by week I have their card and don't have to invoice, wait for check, wait for clearing, and all those stalls at every one of those steps).

    Good to know that I may lose the bad business but not to worry and use this to weed out the problematic clients.
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    • Profile picture of the author banwork
      Originally Posted by partyfavor View Post

      Great and timely thread

      I'm in the nightlife business. Marketing coach, developing promotions, managing ads and social media best practices etc.

      In this biz, every owner wants to sign up but pay later, and recently it's getting really bad trying to collect. I've converted many clients to upfront pay or credit card on file (at least if I charge week by week I have their card and don't have to invoice, wait for check, wait for clearing, and all those stalls at every one of those steps).

      Good to know that I may lose the bad business but not to worry and use this to weed out the problematic clients.
      I like your strategy for keeping a credit card on file as well. That seems like a good option for meeting in the middle. You can always use an authorization beforehand to verify you can charge and then charge at the agreed point of service. If the payment does not go through, you can always try again when they pay their card down!
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      • Profile picture of the author partyfavor
        Originally Posted by banwork View Post

        I like your strategy for keeping a credit card on file as well. That seems like a good option for meeting in the middle. You can always use an authorization beforehand to verify you can charge and then charge at the agreed point of service. If the payment does not go through, you can always try again when they pay their card down!
        Exactly. Credi card has been the best way by far for me.
        I charge weekly, so if it misses I contact them and they clear and I try again a day later

        With invoicing, it was an email out to them after the work done, waiting on a check made and sent in the mail then waiting for it to clear. Such a process and I manage work weekly SO if at any point in that line they stall, it's more waiting time and I may be into three weeks of free work before pay comes in. Not good when they don't wanna pay, I'm already weeks in instead of cutting them off right away w a failed CC.

        Upfront or immediately after the work w a CC is where I want 100% of my clients now.
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        • Profile picture of the author savidge4
          I have 2 payment structures. there is the 100% up front and the 50 / 50 payment plan. My 50 / 50 I think is a bit different than most those here. If my clients choose the 50 / 50 plan the first 50% is NON refundable. With my web site services the site is not moved to the clients server til after the final payment. Any of my hard goods IE printing, or vinyl etc is not dropped off until the last payment is made, or made at time of delivery.

          I then go a step further with the 50 / 50 plan. With every contract there is a delivery date. If the last payment is not made within the seven days proceeding said delivery date the amount increases 10% based on the whole price. And that will increase at 10% every 7th day until paid.

          I will tell you that I have really never had to much an issue with payments. This newest payment structure is more a reflections of the path I am now taking, and just nipping things in the bud before anything were to get out of hand!
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  • Profile picture of the author laurencewins
    I always get 100% payment upfront. There are only a couple of exceptions from regular clients when I don't know the cost until the work is done but they are long-term customers who always pay.

    If a new customer has issues paying upfront, then they're not worth dealing with, in my opinion.
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  • Profile picture of the author franergy
    Definitely get a setup or admin payment - most accounts have to be set up, put into a system, etc. So get comfortable explaining what the upfront $500 or $5,000 fee is for. Most local biz folks understand this.
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    • Profile picture of the author lerxtjr
      100% prepaid has always worked for me so it's a quick phone discussion if alternative payment requirement is the first thing out of the prospects mouth. If the project sale is over $3,000, then I'll require $2500 up front and the remaining balance a few weeks later once the project is approved and the day before the project goes live.
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  • Profile picture of the author JTV
    When I started out, I took what jobs I could - many of them being 25% upfront and the rest later, others - 50%-50%, but now I take only upfront payments, after having been burned a few times too many. I have enough business going to not have to rely on unreliable clients, as well, so that's a plus. Sometimes I'll make an exception for a client I've worked with before, who I have a good relationship with.

    But like you said, asking for payment upfront does a lot to weed out the unreliable people and time-wasters.
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  • Profile picture of the author sdentrepreneur
    Yes.....100% Upfront !!! I don't do any web design, so everything is Month to Month. If for some reason they don't pay, I stop working......makes life simple. :-)
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  • Profile picture of the author BlackKryponite
    Yes 100 up front it works the best
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  • Profile picture of the author bbminded
    Maybe someone mentioned already, but has anybody looked into using a third party escrow type service? How I believe ebay works..... Person makes full payment for goods/services that is held by a third party and released to the seller once those goods/services are delivered as expected.
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  • Profile picture of the author Rus Sells
    I have always had a different mindset because of how much dishonesty I have seen in my life mostly as a police officer. I figured I was better off accepting less business by charging 100% before I did any work. I accepted 50/50 payments occasionally when I started but now I never accept anything except full payment prior to me doing anything. If someone asks why, I tell them because that's because people trust me and I trust other people. I tell them everyone always pays me upfront and that is the only way I do business.
    100% Yes Yes
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  • Profile picture of the author Oziboomer
    Although this is an old thread there is something my collection agency rep mentioned to me when we last chatted that was relevant.

    "If someone can't pay today, what makes you think they can pay later?"

    A lot of the issues can be resolved by the right choice of words.

    What words do you use to get paid NOW?

    Best regards,

    Ozi
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    • Profile picture of the author Ron Lafuddy
      Originally Posted by Oziboomer View Post

      Although this is an old thread there is something my collection agency rep mentioned to me when we last chatted that was relevant.

      "If someone can't pay today, what makes you think they can pay later?"

      A lot of the issues can be resolved by the right choice of words.

      What words do you use to get paid NOW?

      Best regards,

      Ozi
      "Do You Value Your Life?"
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    • Profile picture of the author Claude Whitacre
      Originally Posted by Oziboomer View Post

      Although this is an old thread there is something my collection agency rep mentioned to me when we last chatted that was relevant.

      "If someone can't pay today, what makes you think they can pay later?"

      A lot of the issues can be resolved by the right choice of words.

      What words do you use to get paid NOW?

      Best regards,

      Ozi
      I just ask "How would you like to pay, check or card?"

      I used to ask "How would you like to take care of this?" but a few said "Send me an invoice". And then I have to explain why I want them to do something they don't want to do.

      Usually the real reason someone doesn't want to pay you upfront, is they don't have the cash flow. Companies don't always use invoices. There is always a company credit card.....

      Of course, you could invoice and just start work after they pay, but why wait?

      There are several reasons I want paid up front. I have expenses when starting work, I have employees, and if I'm paid up front, collections aren't going to be a factor.

      But the real core reason I get paid up front is this; In the customer's mind, it's not a done deal...until money changes hands.
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      • Profile picture of the author TrickyDick
        Originally Posted by Claude Whitacre View Post

        I just ask "How would you like to pay, check or card?"

        I used to ask "How would you like to take care of this?" but a few said "Send me an invoice". And then I have to explain why I want them to do something they don't want to do.

        Usually the real reason someone doesn't want to pay you upfront, is they don't have the cash flow. Companies don't always use invoices. There is always a company credit card.....

        Of course, you could invoice and just start work after they pay, but why wait?

        There are several reasons I want paid up front. I have expenses when starting work, I have employees, and if I'm paid up front, collections aren't going to be a factor.

        But the real core reason I get paid up front is this; In the customer's mind, it's not a done deal...until money changes hands.
        I don't even accept checks or credit cards anymore... I've had $72,000 checks bounce... and people "change their mind" and dispute a credit card charge... Both were turned over to collections, they never recovered a red cent.

        It is wire transfer or USPS Money Order... With a USPS Money Order, you take it to a post office and walk out with cash.
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        • Profile picture of the author Claude Whitacre
          Originally Posted by TrickyDick View Post

          I don't even accept checks or credit cards anymore... I've had $72,000 checks bounce... and people "change their mind" and dispute a credit card charge... Both were turned over to collections, they never recovered a red cent.

          It is wire transfer or USPS Money Order... With a USPS Money Order, you take it to a post office and walk out with cash.
          I think that's a little harsh. I understand wanting payment up front, and I would pay up front if asked, but not accepting a credit card? Not accepting a check before you begin work?

          I know that's costing business.

          If I had a supplier that wouldn't take my credit card (because they were afraid I wouldn't like what they delivered) I'd just not do business with them. Other people, equally qualified would be glad to take a check or charge a card before they begin work.

          In fact, the only reason I ask for the full fee up front, is that I never want to be in the job of collecting money, after I've delivered the work and paid my help.
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          • Profile picture of the author TrickyDick
            Originally Posted by Claude Whitacre View Post

            I think that's a little harsh. I understand wanting payment up front, and I would pay up front if asked, but not accepting a credit card? Not accepting a check before you begin work?

            I know that's costing business.

            If I had a supplier that wouldn't take my credit card (because they were afraid I wouldn't like what they delivered) I'd just not do business with them. Other people, equally qualified would be glad to take a check or charge a card before they begin work.

            In fact, the only reason I ask for the full fee up front, is that I never want to be in the job of collecting money, after I've delivered the work and paid my help.
            I wouldn't accept credit cards... But, they can chargeback... at will.

            Checks... I won't go there again...

            The reason?

            The payer can go back and "reverse the check" anytime... So we're precise, you can cash a check at your bank, it could "clear" and the payer could come back and have that money moved from your account to their account. There is no mythical 7-10 day "clearing" period. This can be done anytime. I've been told this over and over by my bank's Branch Manager and several other bank employees.

            Even with a signed contract, your're left to sue them in civil court. Unfortunately, many of the companies will have no money... So, that is a waste of time, money and effort.

            My business doesn't revolve around the $7 WSO buyer... These are $10,000 or more Clients. So, picking up the phone and wiring money is no a big deal.

            Whether you accept credit cards or checks, you are still in the collections business even if you don't want to be.

            The bottom line is...

            If someone doesn't do business with you because of your payment method, you haven't made your value clear or they think they're buying a commodity. The former means you're not doing your job. The latter means they're probably not an "ideal" client... and you're better off without them because they'll be a pain in the posterior later.
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