Payment terms and expectations for small business customers

[timeshifter]

Almost all of my work is essentially break fix. Not MSP. Curious about how others who do similar work or getting paid by their small business customers.
Two of my biggest customers are very different in how quickly they pay. One calls me in the morning she received the invoice and asked me if I want to pick up my check. The other waits 30 days to pay. Remainders take anywhere from a couple of days to one or two weeks to pay.

Since in the past I have not been very consistent about billing on a timely basis I’ve never developed policies for when I expect payment, incentives or disincentives for payment timeliness.

What kind of payment terms expectations and realities are you finding with your customers? Note that this isn’t the context of businesses where you go on site, not people who walk in the store.

 

[nlinecomputers]

Due upon receipt.

 

[Markverhyden]

I'm 30 days on the invoice but I'm more than happy if they want to pay earlier.

 

[britechguy]

My invoices read "Due upon receipt" but also have a space for 30/60/90/120 days past due, too:



I don't think I've ever had to use anything except the 30 days, and when I did there was generally a very embarrassed and prompt payment right after I sent it out.

This is with the exception of the work I do for the Commonwealth of Virginia. Then I get paid whenever the invoice has made it through the multiple layers of processing that results in EFT payment. Generally over 30 days but less than 60.

 

[timeshifter]

I use Quickbooks Online. Thinking about trying to find a way to have it send automated reminders at 21 days.

 

[callthatgirl]

No invoice, just get their card before you start services. I am break/fix and do it, works well.

For those that handle strangers from the internet on a daily basis....
Client says "well, I only pay after services are done"
Me: Ok call someone else lol
Client says "How do I know you're not going to scam me"
Me: You called me. I didn't call you.

I could up with positive comments all day.

 

[Sky-Knight]

Yeah it's your service, you set the expectation.

 

[Diggs]

I use Quickbooks Online. Thinking about trying to find a way to have it send automated reminders at 21 days.

I thought it does that automatically with the default settings. My QB Online did (although I can't remember the time frame) and it embarrassed me a bit as I didn't know it was sending reminders continuously to customers.

Most businesses do Payables once or twice a month and that's it. (When I was in the corporate world they stretched their money and never paid anything until it hit the 45 day mark.) I always asked that my invoices go into the next payables cycle for businesses.

 

[HCHTech]

We use Quickbooks desktop. For residential break/fix work, we get paid before we leave if it's an onsite appointment. For remotes, we ask for a credit card at the end of the call, but for some long-time customers, we'll email a net-15 invoice immediately after the service. Recurring services for residentials get an invoice emailed 15-days before the service expires, due net-15.

For commercial customers, if they have service every month, we'll accumulate charges and email the invoice on the 1st of the month for the previous month's work, due net-30. For recurring services, we bill 15-days before the service expires due net-30 (yes, that's a disjoint in the process). If it's a commercial customer that doesn't have service every month, we bill the day after the service, due net-30.

I'm not in love with the net-30 thing, but frankly, that's what most business do whether you play along or not. It's just simpler to play along. It all works out as long as you don't get behind on billing!

Edit: We also do followups manually if an invoice comes past due. We use the memo line on the invoices to record when invoices were emailed initially, and the date of any followups, and whether they were email or mail. I have always hoped to somehow automate followups, but QB sucks at this in general, and also because of our variable due dates, I gave up.

 

[VISA MC]

We use Quickbooks desktop. For residential break/fix work, we get paid before we leave if it's an onsite appointment. For remotes, we ask for a credit card at the end of the call, but for some long-time customers, we'll email a net-15 invoice immediately after the service. Recurring services for residentials get an invoice emailed 15-days before the service expires, due net-15.

For commercial customers, if they have service every month, we'll accumulate charges and email the invoice on the 1st of the month for the previous month's work, due net-30. For recurring services, we bill 15-days before the service expires due net-30 (yes, that's a disjoint in the process). If it's a commercial customer that doesn't have service every month, we bill the day after the service, due net-30.

I'm not in love with the net-30 thing, but frankly, that's what most business do whether you play along or not. It's just simpler to play along. It all works out as long as you don't get behind on billing!

Edit: We also do followups manually if an invoice comes past due. We use the memo line on the invoices to record when invoices were emailed initially, and the date of any followups, and whether they were email or mail. I have always hoped to somehow automate followups, but QB sucks at this in general, and also because of our variable due dates, I gave up.

Exactly what we do lol
Residential is due on receipt. If it’s on-site we collect a check or run a card before leaving. If it’s in shop, they don’t get their stuff back until they pay. Remote we leave our remote agent installed until they finish making payment. This does 2 things 1) it lets us help them pay online so next time they can do it themselves and 2) leaves us connected should they try to pull a fast one and hang up. Never happened yet.

Business is net 15 no matter what. If they have more than 3 calls into us per month we will rack them all up and bill once or twice a month. I make sure it doesn’t get too big in terms of what’s owed. Usually I’ll send a bill at $3-400.

 

[SAFCasper]

Yeah it's your service, you set the expectation.

Precisely this. So long as the terms are made clear upfront, before any work is done, it's entirely your decision what they are. And they don't need to be the same for everyone.

For us, most clients are business so it's Net-30 purely because that's what is expected. For newer clients we might restrict this until trust is established. It's all about protecting yourself.

 

[DRPCNZ]

My invoices read "Due upon receipt" but also have a space for 30/60/90/120 days past due, too:

View attachment 13729

I don't think I've ever had to use anything except the 30 days, and when I did there was generally a very embarrassed and prompt payment right after I sent it out.

This is with the exception of the work I do for the Commonwealth of Virginia. Then I get paid whenever the invoice has made it through the multiple layers of processing that results in EFT payment. Generally over 30 days but less than 60.

I NEVER put 60 90 or 120 on my invoices as I believe that gives the client an expectation that 120 days is acceptable.

 

[DRPCNZ]

New Zealand is a country where for some unknown reason Invoices get paid the 20th of the month following date of invoice. My Invoices have due in 7 days on them home clients are usually very quick before the 10 days Some of the older bigger clients (I have been Self employed since 1994) are 20th of month following but the majority are the 10 days. What I have noticed over the last 2 years is that a lot of small businessses are paying almost upon receipt. I have yet to work out wether it is "We have the money lets pay while we have it, or we have go plenty of money just pay it"

 

[mikeroq]

Back at my previous employer we were "NET 30" basically. Didn't really have any late fees, although he complained about money all the time.

For most in shop work for residential customers it was pay on pickup. If they were a business or a long standing customer with an account they could put it on their account.

For service calls they were billed whenever he felt like it.

We had business that seemed to pay all their bills once a month. Some maybe twice. Some businesses took more than 30 days. One would call with credit card the day they got the invoice.

Customers like local governments and bigger companies took longer. One was we had a plant that was bought by johnson controls. They take forever.

Now I'm on the flip side, my company pays bills as they come. I think we pretty much pay a dozen bills every day at least.

 

[cypress]

Mostly break with 1 MSP client right now.

MSP Client is a business and they pay NET 15. They prefer to split the monthly bill in 2. So basically when they cut the checks for the employees I also get paid as well. Been like that for almost 7 years now.

Break / Fix client payments are due at time of receipt especially if it is a new client. Others that we have had a relationship with for years will get an invoice email and they can pay online or mail the check but the expectation is that it is still do upon receipt.

Square has been good in that I can email the Invoice and then set reminders. I set 3 of them, 1 day after due date, 3 days, and then 7 days. 9/10 times after the first reminder I get the payment.

 

[Fred Claus]

Depends on the company. Some that I do will pay me out of petty cash. Other times they require an invoice and add it to their list for the bookkeeper to pay. This could be at the end of the month or it could be next week. Depends on how they run.

 

[sapphirescales]

No invoice, just get their card before you start services.

THIS!!! When it comes to going out on-site, I always take payment before services are rendered based on my estimate. If it's more then I charge the remainder when the service is complete (unless it's a huge amount more). If it's less, then I process a partial refund. There is NO reason to give clients months and months to pay. I'm not a bank. If you want a loan, go talk to a banker. I'm not going to give you a free loan.

When it comes to computers that are in the shop, I collect payment at time of pickup. If it's data recovery or a computer that costs more to fix than it's worth, I collect payment up front. I just got in a Surface laptop that needed a $500 screen. The thing is only worth $600 max so you bet I took payment upfront. I don't want to be stuck trying to sell that thing. I hate Surface devices. They're disposable pieces of junk. The last thing I want to do is get stuck with it and then be forced to sell it to recoup my losses only for it to have a problem 6 months later that costs another $500+ to fix. I don't want to deal with that BS.

 

[britechguy]

For those of you that can get your customers to pay in advance of service, more power to you!

I do not, ever, do that myself, nor would I expect it of someone else. Services must be rendered before I even think of handing over one red cent. If that's unacceptable to a provider, other options exist, and I'll seek them out.

 

[HCHTech]

I have a customer that has an corporate event-planning business. Think trade shows & annual meetings, etc. She works almost exclusively with big companies like Johnson & Johnson, Westinghouse, etc. She has huge outlays required to rent spaces, staff & equipment usually at sites far across the country but she is lucky to get her invoices paid in 30 days. It is completely normal to wait 90-120 days on most invoices. I asked her how she even survived in this environment and she said it was tough. She has a $500K credit line with her bank. This makes me very happy that I survive just fine on net-30. Yikes.

 

[YeOldeStonecat]

We're mostly MSP, some break fix clients....steady break fix clients. Don't really deal with "strangers walking in, one-of clients".

Payment due upon receipt for all clients. Much like BriTech has...spaces for those added months ...and we add interest.

For our MSP clients, for orders above $10k....we'll ask for at least a good % of a deposit. But for under 10k, we'll just leverage our credit with the disties.