Story Details

SOP Video: Offering Terms to Clients

mspradar on Small Biz Thoughts by Karl Palachuk

http://blog.smallbizthoughts.com - One of the great fallacies that new service providers fall into is the belief that they have to offer payment terms to their clients. I did it when I first started. Then I gradually found that lots of people owed me money. So I changed my policies.Fallacy One: You have to offer payment termsFallacy Two: Your clients will be in an uproar if you change thisWe had always asked for payment on the first of the month. Eventually we switched to credit card only on the first of the month. Almost zero push-back. For clients who didn't want to do that, our terms are three months in advance by check. Zero push-back.Next we asked to be prepaid for all hardware and software. After all, why should we be out of pocket for tens of thousands of dollars of someone else's equipment? Zero push-back.As for projects, we asked for at least 50% up front and milestone payments for larger projects. No push-back. Finally, we asked for people to pre-pay blocks of time so that weekly minor invoices go away and we just chip away at prepaid time. Zero push-back.The point is: These are very reasonable terms. And they can make a huge difference with your cash flow. My latest SOP video talks about some of the specifics of setting up "terms" and making your exposure as small as possible.Feedback welcome.:-)Feed: http://feeds.feedburner.com/SmallBizThoughtsByKarlPalachuk

All material Copyright (c) 2006-2016 Karl W. Palachuk unless otherwise noted.

Submit a Comment

Log in to comment or register here