Comments on: Do You Hear That Banging? http://smallbiztrends.com/2008/12/do-you-hear-that-banging.html Exploring the trends driving small business Thu, 09 Feb 2012 19:12:00 +0000 hourly 1 http://wordpress.org/?v= By: Steve Barry http://smallbiztrends.com/2008/12/do-you-hear-that-banging.html#comment-652503 Steve Barry Fri, 09 Jan 2009 21:22:08 +0000 http://www.smallbiztrends.com/?p=7574#comment-652503 I have customers to whom we extend early payment discounts (ie: 2%/10, net 30). Some of them will then pay within 10-12 days and take the discount, yet they have other invoices still outstanding, some of them even beyond the 30 days net due date. It seems like they shouldn't be taking discounts until all invoices that are beyond the 10 day discount period are paid in full. Am I nuts? What is customary now? I have customers to whom we extend early payment discounts (ie: 2%/10, net 30). Some of them will then pay within 10-12 days and take the discount, yet they have other invoices still outstanding, some of them even beyond the 30 days net due date. It seems like they shouldn’t be taking discounts until all invoices that are beyond the 10 day discount period are paid in full. Am I nuts? What is customary now?

]]> By: Jason http://smallbiztrends.com/2008/12/do-you-hear-that-banging.html#comment-650742 Jason Sat, 13 Dec 2008 14:29:26 +0000 http://www.smallbiztrends.com/?p=7574#comment-650742 @Ken I understand you point, and that's true for many businesses, but for those where marginal costs are low (i.e. software) it still might be better to take longer payment terms and get paid eventually. I also think it depends on the customer. Large companies with real accounts payable departments have no excuse for late payments, and sticking them with late payment fees is a way to get them off the dime (although remember your late payment rules MUST be on the original invoice!). Another idea is to offer early payment discounts. That is, intentionally inflate the cost by (e.g.) 5%, but offer a 5% early-payment discount if paid NET 30. This way the DEFAULT CASE is to get an extra 5% if they pay late, thus offsetting (somewhat?) the financing penalty they incur on you. @Ken

I understand you point, and that’s true for many businesses, but for those where marginal costs are low (i.e. software) it still might be better to take longer payment terms and get paid eventually.

I also think it depends on the customer. Large companies with real accounts payable departments have no excuse for late payments, and sticking them with late payment fees is a way to get them off the dime (although remember your late payment rules MUST be on the original invoice!).

Another idea is to offer early payment discounts. That is, intentionally inflate the cost by (e.g.) 5%, but offer a 5% early-payment discount if paid NET 30.

This way the DEFAULT CASE is to get an extra 5% if they pay late, thus offsetting (somewhat?) the financing penalty they incur on you.

]]> By: Ken Kaufman http://smallbiztrends.com/2008/12/do-you-hear-that-banging.html#comment-650679 Ken Kaufman Fri, 12 Dec 2008 22:39:32 +0000 http://www.smallbiztrends.com/?p=7574#comment-650679 I enjoyed this article, although I am cautious of one part of being flexible with the customer. I would stand firm on payment terms, not extending them more credit than they already have. We have seen several business that have seen their cash flow decrease dramatically becasue they did not understand the impact extending payment terms would have. SOme customers were stretched to 60 instead of 30 days, and others were allowed to be past due by more than 90 days and still order new products. Just a word of caution - hold your ground on payment terms. I enjoyed this article, although I am cautious of one part of being flexible with the customer. I would stand firm on payment terms, not extending them more credit than they already have.

We have seen several business that have seen their cash flow decrease dramatically becasue they did not understand the impact extending payment terms would have. SOme customers were stretched to 60 instead of 30 days, and others were allowed to be past due by more than 90 days and still order new products.

Just a word of caution – hold your ground on payment terms.

]]> By: Erwin Tan http://smallbiztrends.com/2008/12/do-you-hear-that-banging.html#comment-650594 Erwin Tan Fri, 12 Dec 2008 00:10:21 +0000 http://www.smallbiztrends.com/?p=7574#comment-650594 It's so true.. Offer something your customers need It’s so true.. Offer something your customers need

]]> By: Jason Cohen http://smallbiztrends.com/2008/12/do-you-hear-that-banging.html#comment-650563 Jason Cohen Thu, 11 Dec 2008 17:47:57 +0000 http://www.smallbiztrends.com/?p=7574#comment-650563 @Luz The subject of <a href="http://blog.asmartbear.com/blog/start-a-business-now-6-reasons-why-this-economy-is-good-for.html" rel="nofollow">that guest-post</a> details why now is a good time. Briefly: low opportunity-cost, low expenses, competitors in trouble. @Amanda Thanks! Yes the comments on the article are worth reading too; some great points made by others, especially when trying to apply my ideas to non-software businesses. It's time more than ever to <a href="http://blog.asmartbear.com/blog/avatar-marketing-sell-to-carol.html" rel="nofollow">focus on your perfect customers</a> and make them happy. They're always ready to buy. @Luz

The subject of that guest-post details why now is a good time. Briefly: low opportunity-cost, low expenses, competitors in trouble.

@Amanda

Thanks! Yes the comments on the article are worth reading too; some great points made by others, especially when trying to apply my ideas to non-software businesses.

It’s time more than ever to focus on your perfect customers and make them happy. They’re always ready to buy.

]]> By: Amanda http://smallbiztrends.com/2008/12/do-you-hear-that-banging.html#comment-650557 Amanda Thu, 11 Dec 2008 16:02:10 +0000 http://www.smallbiztrends.com/?p=7574#comment-650557 You're right. If your business offers a service or product that consumers always need, this is a good time to take that leap. Jason, great article. I enjoyed reading the comments that your post stirred up. Obviously, this is a subject of contention. You’re right. If your business offers a service or product that consumers always need, this is a good time to take that leap.

Jason, great article. I enjoyed reading the comments that your post stirred up. Obviously, this is a subject of contention.

]]> By: Chris http://smallbiztrends.com/2008/12/do-you-hear-that-banging.html#comment-650556 Chris Thu, 11 Dec 2008 15:56:53 +0000 http://www.smallbiztrends.com/?p=7574#comment-650556 I really think that at this time, it's about trust. By nurturing clients and customers you are building trust. And in times of uncertainty, people really need to trust in someone or something before moving forward. And I really think that taking it a step further and offering something additional is key right now, too. (i.e. discounts, special promos, freebies) Like Diane says "give and you will get." I really think that at this time, it’s about trust. By nurturing clients and customers you are building trust. And in times of uncertainty, people really need to trust in someone or something before moving forward.

And I really think that taking it a step further and offering something additional is key right now, too. (i.e. discounts, special promos, freebies) Like Diane says “give and you will get.”

]]> By: Butler Consultants Financial Statements http://smallbiztrends.com/2008/12/do-you-hear-that-banging.html#comment-650550 Butler Consultants Financial Statements Thu, 11 Dec 2008 15:43:24 +0000 http://www.smallbiztrends.com/?p=7574#comment-650550 I agree that now is a good time to start. There is a lot of good work force out there that needs to be hired. People are looking for something different and investors need to put their money somewhere. I agree that now is a good time to start. There is a lot of good work force out there that needs to be hired. People are looking for something different and investors need to put their money somewhere.

]]> By: Luz Spielberg http://smallbiztrends.com/2008/12/do-you-hear-that-banging.html#comment-650513 Luz Spielberg Thu, 11 Dec 2008 06:46:22 +0000 http://www.smallbiztrends.com/?p=7574#comment-650513 Hi Jason, Why do you think this time is even more perfect? Hi Jason,

Why do you think this time is even more perfect?

]]> By: Martin Lindeskog http://smallbiztrends.com/2008/12/do-you-hear-that-banging.html#comment-650481 Martin Lindeskog Wed, 10 Dec 2008 23:36:52 +0000 http://www.smallbiztrends.com/?p=7574#comment-650481 Diane Helbig, It is time to promote the idea that it is a voluntarily exchange of values between two parties, i.e., the trader principle. The expression, ‘What goes around comes around.' will give an echo for a long time... with things going on at the moment with bailouts, hand outs, special favors for pressure groups, etc. Diane Helbig,

It is time to promote the idea that it is a voluntarily exchange of values between two parties, i.e., the trader principle.

The expression, ‘What goes around comes around.’ will give an echo for a long time… with things going on at the moment with bailouts, hand outs, special favors for pressure groups, etc.

]]>