What do you do if your customers are stretching you for payments?
- Should you shout at him?
- Take external help?
- Write him off?
- Start taking Advance Payments?
What is the best known practice?
Find below viewpoints of some Startup Specialists from “The Morpheus”
Mayank Dhingra said
1) Unless you really have to, avoid credit of any kind.
2) Accept cash upon delivery for every customer (new or old)
3) Going home with a post dated cheque from client is better than going back empty handed
Ashutosh of Easy Square Feet said
You can also request for a cheque which is dated today. (PDC is not as powerful). Assure him that you will deposit the cheque on the date that client is comfortable. (And you will call him to take his approval before depositing).
Rahul Yadav of Scopial said
We offer cash discount of 2-3% and prefer getting the full amount upfront. We are startup companies and sooner we get the money in our hand, the better it is for us. Yes you have to decrease your profit but this saves you from delayed payment or in worst case no payment at all. PDC’s, LC’s, Bank Guarantee are useless unless there is a huge order and you are dealing with a reliable and old client.
Sumit of Common Floor said
Asking cash upfront becomes a bit over demanding. Cheques before delivery works best. Even the PDC works for us. Only 1 in 30 cheques get bounced because of funds insufficient. But that too get resolved offline with the client unless client has bad intention or had really bad experience with your service. Cases like these will happen 1-2%. So you really cant punish other 99% customers for this. Remember PDC from company account has far more value than from the personal account. Even we give PDCs to our vendors from our companny account and we give the same logic 🙂
To sum up, This is a good order:
- Ask an upfront payment
- If No, Ask an advance Payment
- If No, Get a clear specific agreement
- If client doesn”™t pay as per agreement, Drop a e-mail
- If the client doesn”™t respond, pick the phone and speak to him, Try some good ole polite persuasion
- If you have done everything and Still Zero Inclination, Take help from a debt collecting agency (Provided the size of the due is justifies the collection cost, if it doesn”™t write off now )
- Last Resort, Legal Action (Try intimating the client of your intention to do so before you involve the courts, sometimes he pays fully or partly now)
- Nothing worked? Write off and Relax… 🙁