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trade discount/settlement discount
I’ve built up a large base of trade customers, which is great, the trouble is they’re notorious for paying slowly.
I’m thinking how to prompt quicker payments, and i’m thinking maybe to offer my trade discount only when the invoice is paid within 30days?
Or offer less discount than I presently do, with the remainder discounted when paid in terms.
Just after peoples opinions as to whether this tactic works?
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5 Replies
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Just do what every supplier would do to you. No more goods untill what due is paid and set a credit limit for each customer. The best word you’ll ever Learn to use is NO
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I don’t have too many account customers, nearly all just accept that I want payment when goods are collected / installed, or before I deliver. generally by card.
I specify on the quotes that a deposit is required or, if they pay up front in full and cleared 7 days or more before works are due to be carried out, that a 5% discount applies.
those with accounts – I know they pay, or they wouldn’t have accounts! one or two a a bit slow (60 days) when I specify 14!! but, when I recently added that there was a 2.5% discount for paying within the 14 days, they paid up prompt! 2.5% of £500 is bugger all worth worrying about and better than waiting for 5-6 weeks for it!
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Cheers Hugh & Ian.
Trouble I have is that i’ve never set or enforced a credit limit, however since moving to the unit cash flows more important.
I am thinking of writing to my trade (other printers) informing them of their credit limit, payment terms, settlement discount, with a copy of my terms.
My end user customers will be treated as the public anything under £100 i’d like paying in full, anything over that a minimum 50% with the balance due on completion. I do offer discounts for paying the full amount in advance, which works well when subbing work out as my suppliers sometimes offer discounts when I pay upfront.
Its good to know the discount works to get a prompt payment.
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If They are notorious slow payers, then get them sorted so they pay quicker or loose them.
Easier said than done so try merthods mentioned above or find better paying customers…they are out there.
I’m fortunate that my three best customers are the best at paying and I rarely suffer from bad payers ….I have done in the past but no longer deal with them. We have enough to do without stressing and chasing money.
‘Cash Flow is King’ and if your bad payers persist it will drag your business down.
Credit is a privilage NOT a right!!
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When I took over the business, the customer base was small, they did grant credit to everyone.
I continued to give credit to customers who paid with little nagging, or passed enough business to me to warrant the credit account.
Trouble is I’ve now expanded my customer base, especially with other printers and continued to just dish out credit.
Now I am in the unit, and I have bills, rent, etc all to pay, cash flows more important and I’d like to get it in order before it gets out of hand.
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