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Thread: Credit is dead!

  1. #1
    Site Caretaker Dave A's Avatar
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    Credit is dead!

    I've had a session with my admin department this morning and my top management team now. It is costing so much time (and telephone calls and legal fees) to collect money at the moment we've decided to go payment up front for all services, with the exception of existing contract customers who have been good payers.

    Debtors don't call back. They pay when they feel like it - if they happen to feel like it.

    I am not having my good customers having to subsidise the losses from the bad customers. If it means less business - so be it. I will tailor the size of my business to suit.

    This way I can focus on giving top class service to paying clients and stop running up costs against non/slow-paying clients.

    Enough is enough!
    The trouble with opportunity is it normally comes dressed up as work.

  2. #2
    Moderator IanF's Avatar
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    Quote Originally Posted by Dave A View Post

    I am not having my good customers having to subsidise the losses from the bad customers. If it means less business - so be it. I will tailor the size of my business to suit.
    Dave
    Agree with you we normally get 50 % upfront, but you will be surprised at the number of companies who will pay you 100% upfront.
    Only stress when you can change the outcome!

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    Platinum Member Chatmaster's Avatar
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    Absolutely no credit my side as well. 100% upfront before I even start working, even with consulting payments are being done upfront at an estimated fee, when the paid time runs out, work stops until the next upfront payment is made,... with exception to people I trust like Ian. I also do not except cheque payments, strictly EFT.

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    Site Caretaker Dave A's Avatar
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    Well, it's a month since implementation of the new system. And all I can say is

    Should have done this ages ago!

    What a pleasure. It will take a few more months before the changes have full effect, I think. But it has already made a major impact on our business model parameters.
    The trouble with opportunity is it normally comes dressed up as work.

  5. #5
    Platinum Member Marq's Avatar
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    It is a trade off on my side.
    A lot of companies I find still live in an archaic world of orders, invoices statements and cheques. This means they need credit of sorts. No credit no deal. One cannot calculate the lost business to you from a cash upfront business model - especially if the opposition is not using that model.

    I occasionally use an increased cost model when not sure who I am dealing with. Pay upfront or 50% deposit = the basic price. If you want 7days - add 5% - 30 days add 10% etc. seems to work, especially when the 7 days additional invoice arrives with a statement - usually via email to save on costs. Then they phone you and not the other way round. The email also goes to numerous people.

  6. #6
    Platinum Member SilverNodashi's Avatar
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    This is the way we work as well, purely cause in the hosting & internet industry we have to pay for services upfront (internet connectivity, data center rent, bandwidth, office rent, etc), and we only start working / order domains / activate accounts upon proof of fully payment. This works very well. I can recall a handful people who actually gave me the finger when I told them we want cash upfront, and told me to take my business and shove it.

    But, I'd rather loose 1 or 2 possible clients, than sitting with 20 or 30 clients who don't pay - the damage is far worse!
    Get superfast South African Hosting at WebHostingZone

  7. #7
    Site Caretaker Dave A's Avatar
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    We're still giving credit - but we're really checking out the potential debtor before giving it. Most clients have been perfectly happy paying upfront though.

    Once you've got the posture, approach and phrases right, it really goes very smoothly. We had teething trouble for the first couple of days until the staff got comfortable with asking for payment up front, but after that it's been a doddle.
    The trouble with opportunity is it normally comes dressed up as work.

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