Allowing customers to leave without paying

[Pentoman]

Any thoughts from the PH business crowd about the benefits/shortfalls of allowing customers to leave without paying (invoicing later instead)? I have worked in both environments, and think that each have their plus sides but I can't decide which, if any, is a preferred way of doing things.

Allowing customers to leave with paying appears to build trust with the customers - very important in certain fields. It also allows you to run invoicing as a separate process performed after the customer leaves. With the downside obviously being the need to chase up payments - and the occasional non-payment too.

On the other side of things, you can insist upon mmediate payment on departure. It means you always get the money, but you have to spend the effort there and then. And have you lost a chance to build a mutually trusting relationship with that customer?

More input anyone?

[Mermaid]

In the car trade, payment 1st. Wonder why.

[Cerbieherts]

You haven't said what kind of business you own, but here's my experience of it.
I owned a garage specialising in high end cars for 8 years. I had the following happen when not getting immediate payment on collection :
1. Well off clients (some with collections of cars) began paying later and later. My cash flow was directly impacted.
2. Collection of car then disputes over the bill leading to non payment and small claims court to gain payment.
3. Paying upfront for expensive parts then waiting an unacceptable amount of time to get paid.

[surveyor]

If I don't know someone I will go out and draw a plan, and invoice once the plan is complete. It's not going out without payment first.

I do some work on account, mainly for solicitors and one particular client. It's a pain in the but - when they are busy, paying me is the last thing they do.

One thing that does make a difference is the invoicing system that I use that sends out a regular chase email, and also makes it easy to pay by card or paypal.

I also include "As a small business we rely upon our clients paying their invoices promptly". It has had a surprisingly good response.

[Jockman]

I allow credit but I only deal with businesses, never the public, and a new business would need to pay on collection until I felt comfortable with it.

In 35 years and over £50m in turnover I've written off less than £3,000, post vat reclaim and corp tax relief.

[Pentoman]

What made me ask was that I had my car MOTd at a local place that I hadn't really used before. I knew I would be home late from work - too late to pick up the car - but I wanted the keys for the car tonight, just in case I had to use it. That meant asking for the keys through my letterbox and saying I would drop in first thing in the morning to pay the bill. Some places would allow that, while some wouldn't.

This just got me thinking about the whole topic. I completely understand needing money there and then. Payment, then keys - very very logical. But could it be more complex than that? Could such businesses be missing a trick? Is there some value in showing a bit of blind goodwill and trust towards a completely new customer, impressing them, and potentially kick starting a fruitful, effective new customer relationship with that one simple gesture? Especially in the garage industry which is absolutely rife with distrust?

More input welcomed here. What other perks and special treatment do we PHers give new customers create new relationships?

I tend not to invoice for fairly minor things, because it seems petty, because I know it's a pain for the (very bureaucratic) customer to have to deal with, and I believe that this gets repaid in other ways. Seems to be successful so far.

[Spanna]

Being a signwriter, almost all sales and jobs are to businesses and they all tend to work on monthly invoicing so it's end of the month for payment. Occasionally they're late, but I tend to hand over a printed invoice on the day of the job/s and email a printable invoice to all outstanding on the morning of the last day of the month as a reminder.

Last month 3 of us spent 8 hours on site, stripped old graphics off and rebranded 3 vans with full colour digital printed artwork and left without any money at all. A total bill of £1500 and leaving the site without anything can get your arse twitching a little as a small time business, but that's how it is in this game.

[Fozziebear]

We give an upfront price and staged payments for the job when it's one of the larger companies. If we do work for individuals we always ask for a % upfront, I've never had any issues as I always explain the reasons at the consultation stage.

[plasticpig]

Mermaid said:

In the car trade, payment 1st. Wonder why.

Not always. I have terms of 30 days with two of the garages I use for servicing / repairs. That's as an individual not a business.

[LeftMuffin]

Most of our customers are on credit account with varying limits from £500 - £150000 depending on who they are and previous payments.

If they haven't got an account then it's 50% deposit, rest to be paid on completion/collection.

Had it before customer not wanting to pay on the collection even though he had agreed terms. Soon changed his mind when we wouldn't release his car.

[ctsdave]

Pretty much all my customers are credit! Some.pay within 30 days others are 90! It can be scary, especially when for a one man band some canand do spend 15k per month!! I believe in old fashioned trust though (once established relationship) and rarely have to chase payments. I supply truck/trailer/consumable parts by the way so in the motor trade. Ive so far, touch wood, only had one customer go bust on me without paying up in full first... I do however take first 2 orders as pro forma and keep credit limits low until I feel confident the customer will pay ok!

[pistolar]

Its not a sale untill youve been paid!!

[Grumpy old git]

From the customers point of view it can produce a massive amount of goodwill.

I recently employed a plumber to fix my boiler, he came on time, sourced parts without any payment from me and did a good job for a reasonable price. On leaving I was fully expecting to have to pay cash, he said "I'll invoice you in a few days, so you can have time to be sure it's all working properly" and I was flabbergasted.

It turned him from a plumber I would probably use again in the future, into a thoroughly decent trustworthy chap, who would definitely get my business in the future, and who I have happily recommended to others.

I did think it was a bit naive of him at the time, but he must see the benefits of doing it.

[Muffsy]

I once built a 6 Door Bespoke Cupboard to house a Large Server and Computer Equipment for a large Recruitment Company with 20+ Employees and the same amount of Offices...
Before starting the Job I offered the Owner 2 choices of Billing, either on an Hourly Rate which I prefer to work or a Quote...
The Guy wanted to Pay Hourly...I bought all Materials with my own money and Built the Cupboards outside of Office Hours on evenings and weekends and after 1 or 2 changes by the Owner I finished and submitted the Bill by Post within a week...
I didn't hear for 3 weeks so calmly Text the Owner asking if he had received my Bill...
He said he had but didn't think it was worth the £1675 and offered me £1300...
I stated that we agreed the hourly rate and his CCTV would prove my hours in Attendance...
He still insisted the work was not worth that much...
After 2 months I though enough is enough, I marched down the Office in Full view of all his employees and had a right slanging match which concluded with me saying "If you ain't F****** paid me a Cheque by this time next Thursday, I will come back on the Friday and dismantle the F****** lot and burn it and that will be my loss"...
I swear to God I would have done that and took a loss rather than accepting a lower payment and looking a fool...
Before the week was up I had a Cheque for my original Bill in my hand with a very sincere apology...
I have since done a few other Jobs at the same offices where I am treated very well and also have painted the Owners house from top to bottom with no troubles...
Apparently he now has enormous respect for me for standing up for myself...

Edited by Muffsy on Saturday 10th May 22:42