Up front payment discount
Up front payment discount
(OP)
Hi all, i have another query regarding my planned design consultancy start-up.
I just wondered if anyone offers discounts for voluntary payment of services up front, as opposed to the usual 30day terms? I'm thinking this might help encourage healthy cash flow in the early days of my business.
If so, do you find it works as an incentive? What might a reasonable percentage be for design works?
I just wondered if anyone offers discounts for voluntary payment of services up front, as opposed to the usual 30day terms? I'm thinking this might help encourage healthy cash flow in the early days of my business.
If so, do you find it works as an incentive? What might a reasonable percentage be for design works?
RE: Up front payment discount
Now I have seen it done where certain clients (or, rather, categories of clients) are required to pay at time of receipt of the work product. Real estate transaction inspections are a big one. They like to try to promise to pay you out of the closing - well that puts you in an odd spot ethically since a damning report that sinks the deal also sinks your chance of payment. So we'd put the report in a sealed envelope, and they hand over a check when we hand over the report. Similar for one-off residential clients. Way too many would flake out and not return our collection calls, so all designs under a certain, reasonable threshold had to be paid when the drawings were provided.
RE: Up front payment discount
RE: Up front payment discount
https://www.handle.com/california-mechanics-lien/
https://www.csemag.com/articles/know-the-lien-righ...
RE: Up front payment discount
RE: Up front payment discount
All established companies will want to pay later, on their terms.
RE: Up front payment discount
Full up front gives the client too much leverage to complain about scheduling...
Mike McCann, PE, SE (WA, HI)
RE: Up front payment discount
Payment up front is generally for Clients you have had problems with in paying on time. Especially the ones who owe you until the next time they need you and then pay the old invoice. Kind of like the neighbor who returns your wrench 3 months later when they need to borrow your hammer.
Payment up front by a good customer who pays on time can cost you a good customer if you do not promptly do their project. They pay you but then you stick another client in front of them is what tends to happen when your cash flow gets restricted. It is human nature. If they find out, I can see them really getting mad. That is possibly the biggest potential pitfall.
And one of my pet peeves, does your invoicing terms match your payment history? Are you willing to do the same or similar for people you owe? I had a structural client that I also bought steel from. They started calling me after 30 days for $8,000 I owed them while the $3,500 they owed me on 30 day terms was at 65 days. They generally paid between 60 and 90 days regardless of what the invoice terms were. It still bothers me to this day and that was in 1994.
RE: Up front payment discount
RE: Up front payment discount