Get paid on time!
The most important activity your business does is:
- Deliver the value to your customer
- Get paid in return
Yet there’s so much anxiety around payments! Especially if you deliver a service, as we do.
Businesses which sell a physical product have an advantage, because customers have been conditioned to pay as they leave the store. Except for shoplifters, of course, but that’s a different problem.
With services, though, it’s critical to structure payments before you start the work. The best auto repair shops make darn sure to set and re-set your expectations as they uncover new work to be done. You don’t want to go in for a $40 oil change and then be shocked by a $1000 bill when you go in to pick up your car.
The way I handle my services is:
- A predictable amount of money
- Paid at the beginning of the month
It’s straightforward and fair, simplifying someone’s decision whether to hire me as their business coach. And each element increases the chance for a professional business relationship.
Predictable amount of money: Some coaches charge by the hour, which can vary each month. Or they have various options which can make the cost unpredictable. I try to include all services and charge a flat amount per month, reducing the chance that my clients will be surprised.
Beginning of the month: Charging at the beginning means that my clients are more committed to following through with the work to come. I help them stay committed to their own success. And it’s at a predictable time, so they can incorporate it in their financial planning.
Automatically: Since I’m billing to their credit card or bank, I no longer have to worry about chasing down invoices and bounced checks. Yes, I pay a few percent for the privilege, but the savings in my time and anxiety is worth it.
Most importantly, we discuss and agree on these arrangements before the client accepts the contract. So there are no surprises, for either of us.
What are you doing in your payment model to ensure that you’ll actually get paid for the value you provide? In as timely a manner as your industry allows?
And how much would it be worth to your business to offer a discount to those who agree to earlier and more reliable payments?
You both may end up much happier.