A common question of late for most business owners is “How is the economy affecting your bottom line?” No business is recession-proof. Given the challenging economy, PMF Bancorp believes a key financial tip for businesses is to ask new clients for advance payments.
Whether the advance payment is partial or full, your fear remains that such tactics will scare off potential clients. Considering the size and nature of the contract at hand, however, PMF Bancorp thinks such a request makes sense. In addition, you should have more confidence in the value of the services or products your business offers.
What is important is not to ask for advance payments with inconsistent criteria. Instead, you should develop specific criteria when it comes to new contracts in terms of amounts and track records. When such criteria are met, advance payments should be requested. PMF Bancorp always provides a credit check service for our clients, and, without question, a routine credit check should be performed before a significant transaction, whether sales or services, is entered into with a new client.
PMF Bancorp recommends that you toughen up your credit policies by reviewing the payment terms you offer to new clients. If you decide to require advance payments, be sure your credit terms are communicated effectively to customers before transactions are competed. If payment policies are stated clearly on a contract or whatever document is used to bind the contract, you are a step ahead of the game. And do not be surprised if you find that other businesses are now requiring new clients to pay 100% of the total fees payable in advance of their services commencing.
PMF Bancorp believes an essential financial tip for businesses is asking either for a deposit or full payment in advance upon starting work for a new client. Finally, always let the client pay in advance when they offer. A mistake businesses often make is not accepting a payment when it’s offered. Always remember if the client offers to pay up front, even if you do not require such payments, take the money with a smile and say thank you.
