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

by 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.
  • 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.
  • 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.
    • 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.
  • Profile picture of the author karanmehra
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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.
    • 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?
  • 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.
    • 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!
  • 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.
  • 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.
    • 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.
  • 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.
  • 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. :-)
  • Profile picture of the author BlackKryponite
    Yes 100 up front it works the best
  • Profile picture of the author 1317
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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.
  • 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
  • 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
    • 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?"
    • 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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