Business question

[obbie]

If you had customers that are slow or overdue in paying.....

Would you respond to a offer of a discount if you paid us today. Example if you pay us today, i can give you a $$$ discount now.
Alot of customers want us (tradies) then we have to chase for 1-2 months to get money.

Thanks

[dede]

I wouldn't offer them a discount otherwise they will leave their account to late all the time. But it's frustrating chasing up owed money. I have a frame here I done for a customer 5 months ago, I have rang him several times and he has said he will come and pay for it as soon as he can, but a no show each time. The worst thing is the picture in the frame is something I wouldn't hang on my wall, so it's no good to me.
You could start letting people know your going to charge interest on overdue accounts.

[Mama Fergie]

I wouldn't offer discount  as everyone would come to expect it. They should be paying you extra on money outstanding. It's not right that you have to chase the money owing when the customer already has the goods. 

[Cuilidh]

Obbie, we rarely discount - we tell our customers that we charge the correct price.  However, our two businesses and customer bases are quite different and tradies are doing it hard.  Just be careful - once you start discounting they will expect it in the future, so perhaps build a discount percentage into your pricing to allow for this.

However, having said that, if we are dealing with schools, we do offer a 10% discount for payment on stock parts if the invoice is paid in full within 30 days of invoice date (not EOM).  We do not include the calculation in the pricing, but as a note on the invoice itself - if you include it as part of the invoice total the discount is taken regardless of when they pay instead of it being an incentive to pay early / on time.

[Cuilidh]

Dede, your post made me laugh.  When we started our business 16 years ago we had a customer come in two days before christmas who needed some work done urgently, before the Xmas break ... we are still waiting for her to come back!  Fortunately it wasn't an expensive job, but very frustrating.

Mama Fergie, many wholesalers now say that they will charge a %age extra if not paid on time, but I am not sure how legal that is if it came to a dispute.  But I agree, it is tempting to charge a penalty for late payment, businesses have to purchase their goods that they sell on and if the customer doesn't pay it really ties up your income - businesses have bills comign in constantly and it is a delicate balancing act to keep your head above water a lot of the time.

[fundj&e]

Robyn are u the only pump shop in town

[Halex]

I woudnt discount but offer payment options over 3 months.

H

[Cuilidh]

That's a good way to go, Halley.  I resent that only because we are then offering an interest free loan to our customers - it is very one-sided, but if it's the only way to get the payment then it is certainly worth looking at this option.  What I am trying to say is that, as our customers are struggling for money, so are we - it's a vicious circle!

[Yvette]

I wouldn't offer a discount now if they haven't paid. In the future you could have a discount if they pay within 30 days or whatever the time frame you want this might work. Or make sure you get a deposit before work starts

[Debbiebillg]

From an ex Credit Manager in large businesss, here's my tips definately offer a discount if you want large Companies and Government to pay on time.  Large companies can save themselves a fortune in usually overdraft interest charges by holding onto your money.

Accounts Payable departments process invoices / accounts in two categories.  They run a weekly prompt payment cheque run which pays all invoices which have a discount. Even those invoices marked as 7 day payment in general (depending on the company and any special arrangements), will be processed as a monthly payment unless they are risking losing discounts.

They run a monthly cheque run which would be their largest cheque run and hence why they drag these accounts out (they don't lose anything by doing so either).  The longer they can drag this one out the better as this is where they make the huge savings on overdraft fees.  Also if they are running their debtors on a 30 day payment cycle, they can collect their money before having to pay the creditors.

Just a little insiight, for what it's worth. I know you are talking small business, but if you deal with big business, may be of some help !

PS if you want to charge interest, then stipulate that this will apply on your "Application for Credit" if this applies, or on the order form when an order is placed.  It needs to be out there on some form of paper work that the customer is provided with.  It is also best to get them to sign the order so you have a record.  But yes definately legitamate to charge interest if the customer was aware up front !


 

[cookie1]

I've never been onvolved in a business but personally I would be really eager if stamped on my invoice was

"?% discount if full payment is received at this office by .......Date."

Give 10 days or 21 days for the discount and if it is received then pay the full price. This could lead to extra work stamping and putting in the date etc.
Good luck with getting your money. I had a holiday job in a paint company office and they never paid their accounts on time. Always very late. It was a well known company too.

[obbie]

Thanks so much.
Yes d we do charge interest, its on our terms, on all invoices and quotes.

I still chase money every week, for the smaller customers.

Big ones are great on paying fast.

thanks again.

[maddy]

Thanks so much.
Yes d we do charge interest, its on our terms, on all invoices and quotes.

I still chase money every week, for the smaller customers.

Big ones are great on paying fast.

thanks again.

Your lucky you have good ones Robyn.....some of ours are the pits! 
Definitely.....do not offer discounts on paying their account....are you re issuing their invoices with a big red stamp saying "overdue"?  That most of the time hurries them up.

Don't get me started on non-payers!!     
Because we supply varied farm services, we have to pay for the products used before doing the jobs....it can be thousands, and when they won't pay up....we're out of pocket!   We are a small business that doesn't have unlimited funds....it gets me so steaming mad!
Any new customers, or extremely large jobs....we now get them to pay for the product upfront before commencing....if they don't like that idea....the job will not be done for them 

[obbie]

Maddy, same as us. we are small, repair alot of breakdowns, no water ect.

We ask for 50% deposit on all quotes, sometimes you can't quote, you just have to go and fix it..


Its all the smaller ones, $1-$2000 that add up, and having to chase all the time. 
Then some try to claim insurance, so that is on our terms now too. 

Main customers, govt depts are fine.
same as us, small business, lots of upfront costs, slow payers.

[Cuilidh]

We are a small business that doesn't have unlimited funds....it gets me so steaming mad!

I'm with you on that Maddy.