Issue link: http://psai.uberflip.com/i/1159010
W EEKLY EDITION AUGUST 21, 2019 G et ti ng Pa i d : Part I By Karleen Kos, PSAI Executive Director You want to set up policies that will motivate customers to pay consistently and on time. Payment terms that are too strict can lower sales, while those that are too permissive will both lower your actual receipts and tend to attract customers that are poor credit risks. A good rule for contracts is t o require payment within 30 days. Portable sanitation companies are divided on whether to invoice everyone from their first date of service (so that you bill multiple times a month) or to pro - rate the first month's rental so that you are billing everyone o nce a month (or once every 28 days, as is becoming more common in our industry). You will need to decide what works best for your business and cash flow needs. Either way, make sure you are clear in your agreement about what happens when payment is late. For instance, if the customer doesn't pay within 40 days, they get a late fee; at 60 days late, they lose service – and so on. Figure out something that makes sense for your company and area, implement it with new customers, and stick to it. You can also p hase it in with existing customers over time. These terms can be tailored to the company as part of your negotiations. You can also consider charging a deposit. You can also charge a deposit before starting any work, turning down customers who don't seem like a good fit. This is often evident from the start; if there is an issue with down payments, there will likely be issues with future invoices. As one owner observed, "If a [customer] refuses to pay a deposit, then I immediately know not to work with th em, even if they beg later on." Reasonable people don't balk at reasonable business terms unless there is a reason that is probably not favorable to your business. • Pre - payment. For smaller rentals and extremely chancy accounts, get full payment up front. It may seem strange to ask for it, but it really isn't. Just make it part of your routine when they sign the rental contract or call in the order over the phone. People are accustomed to paying for many services up front. Ever fly on an airplane or attend a sporting event and get an invoice later? Of course not. If someone questions a prepayment policy, it is going to be for one of two reasons: (a) They don't trust your company and want assurance that you'll deliver as promised. In that case, offer them re ferences. (b) They don't actually plan to pay you – or they can't pay you. Let's face it. In this age of credit cards, most people could give you a card for a small rental unless they are totally maxed out. If that's the case, they probably won't pay you o n an invoice later. P AGE 13 CONTINUED ON PAGE 14