If you have the kind of business that doesn’t require full payment from your customer within a 30-day period from delivery of goods or services, you may find that offering a range of payment plans can help you bring in more customers. Even if you can’t do this for everyone, offering a payment plan to good customers who become past due can give you a better chance of collecting what you’re owed.
Not only is a payment plan more manageable than a lump-sum payment, but people tend to have less resistance when they have payment options to choose from or when they have a say in their payment plan. One author who’s written on the topic says, “People tend to support that which they help to create.”
If your customer owes you money, chances are that they owe others. You want to get your payment to the top of their list. That may mean making it a monthly payment they can manage.
A payment plan probably isn’t the solution for every past-due customer
Before you offer a customer a payment plan to settle their bill, it’s important to look at things like:
- How much they owe
- How long they’ve been a customer
- What their past payment history has been like
- Why they aren’t able to pay what they owe you right now
When you offer them a plan, make sure they’re aware that you don’t do this as a rule. You may also want to have a policy regarding how many times per year you’ll agree to place a customer on a payment plan, and what your policy is if you do business with them again (for example, requiring a deposit).
Put the details in writing
It’s crucial to put together a detailed contract that specifies start and end dates, due dates, amounts, penalties and more. You may want to draw up a unique agreement for each customer if this is something you don’t regularly use. However, the basics that are required by law can be consistent throughout.
Of course, the customer needs to sign the agreement. However, you also want to be clear that they understand it. Ultimately, your goal is to get paid – not to end up in court with them. Having legal guidance as you determine your policy regarding payment plans and as you put them in place is crucial to making them work.