sundance-communications.com Forums Member Forums Telephone Complaint Department & Contractors Getting people to pay: Is this a valid "stick?"

These days one of the biggest problems any small business faces is geting people to pay their bill. I personally know of several small companies that have gone under partly because of outstanding invoices with customers who themselves have folded, pulling others down with them.

The "stick" we are tempted to try is only useful for labor costs; if you are a system vendor selling equipment at a fixed price it is really of no use. We concentrate mainly on troubleshooting and repair of cabling, so our bill to a customer is pretty much all labor, except for incidental materials like the occasional jack.

The "stick" is this: When a customer asks "how much," the answer is: We have two prices. If you pay at the time of service, it is $n per hour. If you want us to bill you, it is (1.5 x $n) per hour (or even 2 x $n).

I know that many companies give a discount for paying "cash," but it is usually only 2 to 10 percent... we're talking here about an actual "multiplier."

This may sound extreme to many people, but billing (and collecting) is a HUGE expense, and if you do have to turn an invoice over to an agency, you are lucky to get even a fraction of what is owed. Just finding an agency can be a challenge these days - in these parts they are turning away work.

We haven't actually tried this yet, but soon we may. I fully expect at least half of potential customers will invite us to kindly take our tool bag and get the hell out of their office, but in that case we have probably dodged a bullet because these are likely the same people who wouldn't have paid their bill anyway (or let it go 90 days, 120 days, 6 months, 2 years...).

Has anybody tried this? Would it be unprofessional? Unreasonable? Foolish? All comments are welcome, just try to keep flames below 650 degrees F.

Note to admins: I couldn't figure out the best place for this, so I put it here. If this discussion is "not for public viewing," then please delete this post.

Jim
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Speaking from a secure undisclosed location.

Every new customer we visit requires a check or CC when we finish. They understand this before we go out.
Have not tried your idea, let us know how it works.
Ken

Moved topic to General as it is not a complaint. click here