Is asking for payment up front right for your business?

Without careful management lack of cash flow can destroy a business, you know this just as well as I do, asking for payment up front might be a way round this.

Many businesses don’t help themselves by performing simple tasks that will improve their cash flow as well as assisting them to be paid on time.

In fact, one of the most common comments I hear is:

  • “I can’t ask for payment up front, it’s not done in my industry sector.”

Upfront payment is OK

Industry standard is to say No to upfront payment, but don’t let that stop you.

There is actually no industry that I’ve come across that can’t ask for payment up front, just because it isn’t the norm or larger players in your industry don’t do it, it doesn’t mean you shouldn’t.

For example, I know people who have gone from 30 days after delivery date to 7 days prior to delivery.

Why did they do this? Well they have to:

  • Commit their time to scheduling deliveries,

  • Commit their drivers time to making the deliveries,

  • they have to pay their suppliers, generally within 30 days of receiving the goods,

so why should they pay out before their customer has paid them?

If you run a workshop, do you ask for payment before the workshop or after the workshop? 100% of people I know ask for payment before the workshop. Why?

  • They are getting commitment to attend,

  • they need to pay venues, catering companies, print out workbooks,

  • get supplies in

  • cover their time.

  • Also once someone has been to a workshop, they’ve had the benefit of it, so what is the incentive to pay after it’s happened?

Trust is critical to any relationship

So let’s turn that logic around, relationships are 2 way, the customer is trusting you to deliver the goods or service agreed in your contract, whilst you are trusting the customer to pay you in the time scale agreed in the contract.

Who says that trust is a one-way street? Why should you trust your customer to pay you on time after you have given them some of your most valuable asset, your time.

You need to get your customer’s buy in to use your services, so why not get a greater commitment from them and get some (if not all) of the money upfront?

Trust is the most sort after emotion in any Customer/Supplier relationship, so what’s holding you back from building this from the beginning?

This blog has hopefully shown you that there is, in my view, no reason you can’t ask for at least some of your charges up front in any circumstance.

What impact will charging up front on have on the perception of my company?

It doesn’t make you look like you are desperate,

It certainly doesn’t make your company look like it’s in trouble,

It does mean that you are cementing the trust relationship with your supplier and pro-actively managing your business and your cash flow, which is crucial to any company as we said earlier.

Now it’s your turn, tell me:

  1. What’s stopping you changing your terms and conditions to ask for part of the money up front?

  2. Have you changed to upfront payment?

  3. What reaction did you get from your customers?


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