Offering a discount for early payment

[Tennasee]

Does anyone offer a discount for early payment? If so, how much? Do you offer a discount off the next purchase/service instead? I'm trying to get my customers to pay in a timely fashion.

[AGMBris]

Hi

Good question. We tend to go mostly Direct Debit and this really works for cash flow. Is that possible for you? Rather then discounting your service. We use BillBuddy which is quite affordable.

Maybe it can assist.

[clintmaher]

Why can't you charge your customers up front with no discount?

Once you start discounting you become a commodity and customers will expect discounts.

Doesn't work in all business models I know, although you can ask yourself the question.

[Divert To Mobile]

I tried it one time only with a slow payer.
They still payed late and at the discounted rate.

Your experience may end differently.

Steve

[DarianCulbert]

We offer the cheapest prices already so we could not give any discount! We also think about this offer but actually clients don't know about this until they come to us so it's somehow not effective. We need upfront payment from our clients and they are happy to do that! I think if you offer good services and you have good reputation, there will be no problem for clients to pay you when you need!

[Shoes2u]

I have been in this situation on both sides. I think the trick is a bit of carrot and stick.
You need to offer very clear guidlines in credit applications, terms and conditions and on the invoice.

I buy shoes and discounts range from 10% - 5% for payment within 7 days. Sometimes I take the discount and make payment couple of days later but my thinking is I do payment 7 days from when I receive them not invoice date which can sometimes be about 4 day difference.
Other suppliers offer discounts of 2.5% for 30 days.


What services/products do you sell?

Regards
Shona

[tonyk]

I offer a discount if a client buys in bulk.

[Tennasee]

Originally Posted by Fishx99

I have been in this situation on both sides. I think the trick is a bit of carrot and stick.
You need to offer very clear guidlines in credit applications, terms and conditions and on the invoice.

I buy shoes and discounts range from 10% - 5% for payment within 7 days. Sometimes I take the discount and make payment couple of days later but my thinking is I do payment 7 days from when I receive them not invoice date which can sometimes be about 4 day difference.
Other suppliers offer discounts of 2.5% for 30 days.


What services/products do you sell?

Regards
Shona

We are a commercial cleaning service so we need to be cash positive, but a lot of our clients have a 30day (or longer) payment terms. Also since some of our jobs are one-offs or not a regular gig, it's difficult to wait and still pay our expenses.

[TheGoldenGoose]

I would only use a discount at a last resort, only I would increase my prices first, then discount back for regular/good paying clients back to the normal price.

Reward the good payers.

Firstly I would be looking at my systems/terms to see if anything can be adjusted to prevent it/minimise it in the first place.

[Shoes2u]

As you are selling services I would not be inclined to offer a discount as you have already provided the service for them
I tend to pay easiest invoices first - those with no credits, that send me correct paper work, best payment option etc.

Instead I would concentrate on making it easy for them to pay you by
1) invoicing them quickly - email
2) send follow up statements - this acts as gentle remiander
3) change your payment terms to 14 days
4)offer number of payment options PayPal, direct debit, bpay, cash, credit card don't put my barriers between you and taking money. It might cost you more in fees but worth it to have in your hand.
5) Arrange monthly direct debits with regular customers this is a win win worth the initial paperwork, as you know coin will be coming regularly.
6) train your customers nothing wrong with a polite call asking when the invoice will be paid. Sometimes better to get accountant or someone else to do this as it can be difficult being money chaser and seller

Generally large corporations you are screwed you cannot get them to pay outside their account department cycle. With smaller buisnesses if you are providing a good service nobody will mind if you ask for quicker payment terms. Never hurts to call them tell them you changing payment terms due to having to pay suppliers and needing cashflow. Truth often works very well.

If any customers kick up a huge fuss about having to pay sooner than they probably have bad cash flow are going out of business and quite frankly you are better of rid of them

Regards
Shona