Home – New Forums Starting your journey offering payment plan options to a client

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  • #990998
    Rock Solid Craftsmen
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    hi

    i would love to offer payment plan options to my clients but as a start up not sure how too. i was going to have an agreement made up by a legal person that covers it all but was wondering your thoughts.

    this would make it easier for people to say yes and get something they want that is hand made just for them

    any help please

    #1179514
    Craig.Smith
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    In my opinion payment plans are a waste of time and money. We still offer payment plans, but there is a large proportion of them stop paying. It’s not worth the money to chase payments or risk the customer spreading bad reviews online due to you chasing payment. Maybe they work for your business, but be cautious. At least with digital products there are ways to lock the product down and only provide access to parts they have paid up to in the payment plan. This option won’t work for your industry.

    #1179515
    Marek
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    Hey,
    I think it’s good idea to offer payment plans so customers with smaller budget can also enjoy your service and you can increase quantity of your sales.

    I think you should somehow find a convinient way to set the payment terms, I just recently had a client who wished to pay in multiple parts so I set the terms in customer engagement letter and also set the terms shortly in the invoice and also in the invoice I did put information of payments which haven’t made yet. – That worked well for me but as I am also new business owner in Australia then I too look forward for answers from more experienced users.

    #1179516
    arrowwise
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    Without knowing what you are selling and how you are packaging it, it is hard to suggest on payment options.

    Working backwards you need to provide flexible and easy payment options, without compromising your abilities to actually get paid under your terms. There are many options, and the ones you choose should be outlined in your order form, along with the repercussions if they don’t pay or run late.

    You want to attract real customers, and not purely ones that like your payment plan more than your business and product.

    #1179517
    MissSassy
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    Knowing what you are selling – I think that payment plans are really not necessary and may be far more head ache than they are worth for your business.

    Stick to a strong marketing edge and start partnering with other businesses that can send clients your way, who can afford what you do.

    #1179518
    Anthony Michaud
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    Rather than exposing yourself to the risk of non payment, why not instead offer a “layby” service, that you accept payments. This way it doesn’t matter how long it takes, and you have a nominal fee $20-$50 to ‘administer’ the layby if they decide to cancel it. This way you are compensated for managing the finances if they don’t proceed, and are fair with regards to a penalty if they don’t go ahead. Providing you’ve fully informed them of the single fee prior to starting, it should be all good.

    (IANAL / layby aspect may have ramifications about the storage of money)

    #1179519
    Campbell
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    Hi Daniel

    As a product based business offering a payment plan needs to be thought of carefully as it really depends on your cash flow as you whether it will be a successful strategy for you.

    By offering a payment plan you are trying to entice buyers to buy from you that may not have otherwise due to their inability to fund the entire cost upfront. This is a legitimate and proven sales strategy used by the likes of Harvey Norman. However I am guessing that as a start-up you don’t have the capital behind you like Gerry Harvey does!

    With that in mind the success of offering payment plans lies in your ability to fund the costs of providing your product over the period of your payment plan. To work this out you will need to consider things like interest expenses (that you might incur if you are funding your business through debt) and include them in the total price of the product you offer on a payment plan.

    You are effectively providing credit to people so you will also want to be very careful in choosing who you give payment plans to. There is no point making a sale if you aren’t going to receive the funds.

    Lastly I would suggest that you structure your payment plan to obtain as much as possible upfront (ideally at least the amount it costs you) and have the rest as a payment plan. e.g. If your product sells for $2,000, try and get $1,000 upfront and the rest over a reasonable time frame.

    I hope that helps. Feel free to get in touch if I can assist further.

    Kind regards

    Campbell King CA
    http://www.mifi.com.au

    #1179520
    Bjorn Behrendt
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    Hi,

    you would need at least some legal disclaimer that your customer signs either in paper-form or digitally e.g. on your iPad or tablet…

    If you go down that path, I would recommend two options:

    a) Capture the customers credit cards details and initiate a recurring payment over a certain timeframe … some online shops also call this a subscription module…
    b) Capture the customers BSB and account number for a monthly direct debit

    In both cases you would need a direct debit authorisation / proof that you are allowed to debit the credit card or bank account, otherwise you might get a chargeback. It is also recommended to send out a monthly invoice / receipt to the customer to remind him/her where you are at with the down-payments…

    It all gets a bit tricky, when you choose to charge interest … On another note: Instead of financing / payment plans… I have seen some startups that start to offer different type of service subscriptions that include some sort of a maintenance guarantee or warranty in it… Maybe another good idea to get recurring revenues in for your startup and to open up doors for monthly payments instead of larger upfront fees…

    Feel free to contact me directly, in case you have further questions about the technicalities of the payment options…

    Cheers
    Bjorn

    #1179521
    Isaac Saiariso
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    the problem is collecting the money after the customer use the service
    i prefer to give them a discount.
    the idea is great but not if you can not insure the collection of the payments does not work you will loose a customer and also part of the payment in my experience.

    #1179522
    My Business Partner
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    You may find a finance company willing to fund your clients debt meaning you get paid immediately and any chasing for payment is up to the finance company

    Good Luck!

    #1179523
    motelier
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    Rock Solid Craftsmen, post: 209260 wrote:
    hi

    i would love to offer payment plan options to my clients but as a start up not sure how too. i was going to have an agreement made up by a legal person that covers it all but was wondering your thoughts.

    this would make it easier for people to say yes and get something they want that is hand made just for them

    any help please

    Hi Daniel,
    Do not do payment plans. Some honest people will pay but many will not. You will spend a lot of time and money chasing monies – you already have enough bookwork to do so why create more work for yourself. You are not a bank. If you do go down the payment plan way add an extra percentage and then give them a small discount. Clearly state when the exact date and how payment is to be made. Get their BSB number. When we were in the building game (now in accommodation) we were asked to do that a few times – did it once and never again. If your clients to not have the funds to pay for your work now will they have it at a later date? Go the lay by way. They do not get their artwork until they have paid you for it.

    #1179524
    Bjorn Behrendt
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    • Total posts: 4
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    Hi Isaac,

    if you actually captured the credit card details or BSB account details the likelihood of failing cash collection would be pretty low, I reckon… Our merchants often charge a certain fee right on the spot with our mobile credit card reader which validates a credit card within seconds… and later they can set up a recurring payment online or charge further instalments onto the same credit card or through a different payment method… Once you have established a validated payment method and you got the legal opt-in from the customer to charge e.g. monthly fees or downpayments the customer would actively have to contact the bank to revoke your debit.

    Cheers
    Bjorn

    More on http://www.mintpayments.com

    Isaac Saiariso, post: 209684 wrote:
    the problem is collecting the money after the customer use the service
    i prefer to give them a discount.
    the idea is great but not if you can not insure the collection of the payments does not work you will loose a customer and also part of the payment in my experience.
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