Until you get paid, contracts are just promissory notes. You deliver the product or do the work based on a promise of payment.
Your customer likely expects to pay you. Use these 3 tips to help them keep their part of the deal:
- Don’t extend credit to new customers without an assessment:
If an order will have a large impact on your bottom line, run a credit check before signing a contract, and seek a down payment, even if the credit status is acceptable. Partial payments ease customer cash flow and reduce your liability.
- Send invoices promptly & make your payment expectations clear at the beginning:
- The sooner your invoice is in the mail, the sooner you get paid;
- Specify payment terms in your proposal & negotiate them together with your quoted price;
- Include your agreed payment terms and due dates in your purchase Agreement and require that your customer sign the written Agreement.
- Make it easy for customers to pay you:
- Keep your promise! Deliver what was promised and confirm this with the customer without mentioning payment due;
- When applicable, propose partial payments. They get the customer’s skin in the game and ensure that you receive some compensation should the customer default on the balance due. Specify when the final payment is due, i.e. upon delivery, no later than 30 days after installation, etc.;
- Save your best payment arrangements for those core customers who pay promptly, respect the value you produce for them and generate the highest profit for your business.
How do you retain the connection between price and payment terms?
What do you do to make it easy for customers to pay you?
