3 ms·

I had this problem, and solved it by giving discounts. Hopefully, your pricing will allow this. It is fairly standard to see a notation on an invoice like 1/10

by MrTonyD 11y ago

I had this problem, and solved it by giving discounts. Hopefully, your pricing will allow this. It is fairly standard to see a notation on an invoice like 1/10 net 30 That means you will give a 1% discount if they pay in 10 days, or the entire undiscounted invoice is due in 30 days. This made a huge difference in my business, since all my customers wanted the discount. I should add that I was doing projects and billing for projects for the Fortune 50 - with a good margin. So I'm not sure if this will apply to your customers.

zenincognito 11y ago
The 1% is quite affordable and it certainly demands an experimentation on our end. I will try and integrate this and get back with how we performed.
- MrTonyD 11y ago
  My invoices typically varied from three thousand dollars to sixty thousand dollars. Counter-intuitively, I offered a 2% discount on the larger invoice - since getting that money would provide plenty of cash to continue my company. After I started the 2/10 net 30 every invoice was paid in ten days - no exceptions for the years I ran my business. And only a handful of the the 1/10 net 30 weren't paid immediately. Before I started giving those discounts, I was really struggling with cash flow. After that, I was swimming in cash.
emmasz 11y ago
It's interesting that you got a positive outcome. I also thought about this solution, but I just assumed, that it would work like a fine on them. And if clients would simply be fined, then they could decide for themselves whether to be late or not. And would obviously frequently choose to be late. And that's not something I want. Of course, it may depend a lot on how you put it. I guess your clients rather felt a loss aversion and didn't just get comfortable with late payments.
- MrTonyD 11y ago
  I quoted a price - say 6 thousand dollars, for the job. Then, when I billed it, I would bill for the full six thousand dollars, with the notation of 1/10 net 30 or sometimes 1/15 net 30 (since a few organizations had trouble getting checks out quickly, and wouldn't even try for the ten). So there was only a discount seen by the accounts payable people - and it was never discussed at any time. I don't know if anybody that I actually worked with even knew I was giving the discounts. They were just there to motivate quick payment. At any rate, they worked very well in real life. Never any problems. Just a matter of adding the notation at the top of the invoice.

by MrTonyD 11y ago

zenincognito 11y ago

The 1% is quite affordable and it certainly demands an experimentation on our end. I will try and integrate this and get back with how we performed.

MrTonyD 11y ago
My invoices typically varied from three thousand dollars to sixty thousand dollars. Counter-intuitively, I offered a 2% discount on the larger invoice - since getting that money would provide plenty of cash to continue my company. After I started the 2/10 net 30 every invoice was paid in ten days - no exceptions for the years I ran my business. And only a handful of the the 1/10 net 30 weren't paid immediately. Before I started giving those discounts, I was really struggling with cash flow. After that, I was swimming in cash.

emmasz 11y ago

It's interesting that you got a positive outcome. I also thought about this solution, but I just assumed, that it would work like a fine on them. And if clients would simply be fined, then they could decide for themselves whether to be late or not. And would obviously frequently choose to be late. And that's not something I want. Of course, it may depend a lot on how you put it. I guess your clients rather felt a loss aversion and didn't just get comfortable with late payments.

MrTonyD 11y ago
I quoted a price - say 6 thousand dollars, for the job. Then, when I billed it, I would bill for the full six thousand dollars, with the notation of 1/10 net 30 or sometimes 1/15 net 30 (since a few organizations had trouble getting checks out quickly, and wouldn't even try for the ten). So there was only a discount seen by the accounts payable people - and it was never discussed at any time. I don't know if anybody that I actually worked with even knew I was giving the discounts. They were just there to motivate quick payment. At any rate, they worked very well in real life. Never any problems. Just a matter of adding the notation at the top of the invoice.