My invoice template hack cut late payments by almost half

I run a small cleaning crew over in Hamtramck and for two years I was chasing clients for money like crazy. A buddy in the Detroit pizza biz told me to put a 3% discount line on the invoice if they pay within 7 days, so I tried it last March. I got burned a few times where someone would use the discount but still pay late, so I added a tiny note saying the discount only counts if the check clears by the due date. Since then, late payments dropped from like 8 a month to 4 or 5. Has anyone else messed with early payment sweeteners that actually stuck? I'm wondering if a higher discount like 5% would make it even better or just eat my margins.

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claire6414d ago

Did you catch that piece on NPR a while back about how smaller discounts actually work better than big ones? Apparently folks see 3% as a nice little bonus, but 5% starts to feel like you're desperate or the base price is inflated. Also, I heard somewhere that tying the discount to the check clearing date instead of just the invoice date is the real trick, which sounds like exactly what you did. Another thing that stuck with me from that same story, some contractor was doing 2% at 10 days and it cut his chase time way down without the abuse you ran into. Maybe try bumping it to 4% but watch your first month of numbers real close, since margins on cleaning gigs are already thin enough as it is.