Home – New Forums Money matters Are you happy to pay upfront for business services?

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  • #972853
    bridiej
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    I’ve had a bit of an issue this month with some late payments, something I can ill afford to happen on a regular basis.

    So it’s got me wondering whether I should ask for upfront payments, before any work is done.

    If you have a moment please vote in my poll and, if you answer “no” please give a brief message in the comment box to let me know why.

    Thanks in advance :)

    #1058238
    Keeta Nova
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    This is something I have considered quite a bit myself.

    As a consumer, it would be a rare occasion for me to pay for something over the Internet, and especially not to a company who don’t even provide their contact details (as many sites don’t these days).

    I am a freelance writer, and I don’t charge much for small business jobs because I keep my overheads low, don’t rent an office and don’t chase bills. Clients pay me upfront for small jobs and progressively for big ones.

    Most of my work is through word of mouth, so clients usually know they can trust me and even though most of my work is done over e-mail I am always available to talk on the phone, or even face to face. I view this honesty and openness as important when you are accepting money upfront. Hope this helps.

    Keeta

    #1058239
    SalenaKnight
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    Why don’t you look at implementing a “must pay for the first 3 services” or similar. Once you have established their credible, you can them look at offering an account.

    #1058240
    The Copy Chick
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    Hi Bridie,

    Unless I’m doing a really small job (less than $200) I charge half up-front and invoice the rest on completion.

    I guess for me it depends on the cost and turnaround of the job. If it’s a same-day kind of thing, or only a couple of hundred dollars (or less), I’d generally expect to pay once it’s finished.

    That said, if your terms clearly outlined you expected payment (or part-payment) up-front, then I probably wouldn’t have a problem with it, as long as I didn’t need the work immediately and pre-payment would delay that.

    If you’ve had tardy clients, maybe you need to send a letter explaining your payment terms and that overdue accounts will be required to make a pre-payment for any future work.

    Good luck with it all!!

    #1058241
    Nitro Promotions
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    I am in the Promotional Products industry and I need to make sure I have payments before I even put the order through.

    I don’t think people mind as long as there is some form of personal communication with them before they pay.

    #1058242
    AgentMail
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    If you look at printing as an example, most will want payment upfront, unless you have an account with them, which you can only obtain by providing 3 references, and usually only after a number of months paying on time.
    With most of my goods, I prefer to pay upfront, as it keeps me on top of things, that I would otherwise forget.
    I don’t think you would actually lose customers by asking for payment upfront, but then again, I know a company who cycles through about 4 different suppliers, and keeps them all running at 90days overdue.
    I would not make it a hard and fast rule, rather chose your loyal customers who you have worked with ongoing for accounts, and new customers pay upfront.

    For bigger jobs, perhaps a retainer style might work for you.

    #1058243
    King
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    bridiej, post: 71790 wrote:
    I’ve had a bit of an issue this month with some late payments, something I can ill afford to happen on a regular basis.

    So it’s got me wondering whether I should ask for upfront payments, before any work is done.

    If you have a moment please vote in my poll and, if you answer “no” please give a brief message in the comment box to let me know why.

    Thanks in advance :)

    You might like to modify the link URL to is goes direct to the poll ;)

    #1058244
    Meagan@Elephas
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    I tend to follow the same lines of the freelances here – small jobs, there is usually a 50/50 payment agreement, whereas larger jobs are broken into ‘milestone’ payments, set out in an agreement with each stage of work covered by a milestone payment. I tend to use 5 x 20% Payments.
    As others have said, printers you do not have an account with ask for upfront payment, so it’s not entirely unheard of. I like paying upfront – you miss out on that, ‘oh god, that’s due’ moment.
    Hope this helps.

    #1058245
    Jexley
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    The Copy Chick, post: 71839 wrote:
    Unless I’m doing a really small job (less than $200) I charge half up-front and invoice the rest on completion.

    I guess for me it depends on the cost and turnaround of the job. If it’s a same-day kind of thing, or only a couple of hundred dollars (or less), I’d generally expect to pay once it’s finished.

    That said, if your terms clearly outlined you expected payment (or part-payment) up-front, then I probably wouldn’t have a problem with it, as long as I didn’t need the work immediately and pre-payment would delay that.

    If you’ve had tardy clients, maybe you need to send a letter explaining your payment terms and that overdue accounts will be required to make a pre-payment for any future work.
    Yup. Same.

    I also have a Client Expectation Document (that they never seem to fkn READ) that outlines when and how I expect to be paid. If they’re not cool about any of that, they have to tell me, otherwise I ding ’em for Late Fees.

    Because I’m the same way too, I get 4 or 5 clients all going late at one time and it’s “Black & Gold rice for dinner again kids!” I give plenty of fair warning that I’m open for discussion on the lateness (“Hey mate, we all get behind sometimes…”) but once they’ve been warned and ignore me for another week, the 15% Late Fee starts kicking in. That threat usually gets things in gear.

    Hell, I just had a fairly big client ignore me for 3 weeks (2 emails a week avg) until I said, “Look, you’ve already racked up $200 in Late Fees… why not work out a payment plan with me until you get caught up. Just give me SOMEthing.” They happily sent me the $200 and promised to pay at least $100 a week until they’re paid up.

    Now… we’ll see if THAT happens… haha.

    #1058246
    APG
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    Hi I’m an Accountant/Tax agent and I look after individuals through to small/medium businesses. This year being my first “out on my own” I decided I wouldn’t offer the usual deduct from refund for individuals because of the hassle of chasing funds when someone doesn’t get their refund as expected (because the gov took the cash to pay another bill). Most clients have understood the reasons as I explain this at the time they book in for an appointment – those that didn’t like the idea haven’t ended up coming in and I suspect this was probably a good thing for me as it seemed to be those clients with multiple years to do, high debts with the ATO already and low chance of me being paid on time. In short it worked out to be a good client screening tool asking for upfront (or at least no the day) payment.

    As for business clients many of them are very keen with upfront fixed fee quotes for work which I do offer. They have the certainty of the fee for the year and know that they can contact me whenever they need to without the “clock” going on and another fee being issued (I don’t do this in any event but many firms they have come from do!).

    I have one key client that actually paid 100% upfront for the full year’s accounting services, the rest on fixed fee pay quarterly at each BAS – just logical time for me.

    I think in small/micro business we need to guard against becoming the unpaid bankers for larger business. We are often seen as a soft touch because its just “so and so” they won’t mind being paid late, or at least they won’t chase me as hard as the larger suppliers. We need to be respectful of key client relationships but also firm enough for them to understand that if our client values our work enough to engage us, then they should keep their part of the bargain and pay in a timely manor. Great service on my part = prompt payment on theirs.

    Happy hunting
    Andrew Green CPA

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