As a business owner, your priority is to deliver quality goods and services to your clients. In return for this, you receive fair payment. This is how it should work in theory at least.
Unfortunately, the reality can be different. Some customers may refuse to pay, despite you holding up your side of the bargain. One potential solution to this is to offer early payment discounts.
Offering discounts may sound counterproductive. However, discounting your products and services is, ultimately, much more cost-effective than having to initiate collection proceedings. Outlined below are three forms of early payment discounts:
1. Set price deductions
Setting discounts at a static rate is one of the most straightforward methods. This involves setting a discount for a set period of days. If the client pays within that set period, they receive the discount. Payments made outside of the window do not qualify for the discount. This can help incentivize clients to make prompt payments.
2. Discounts on a sliding scale
Another option that businesses have is to implement sliding scale discounts. In contrast to set price deductions, sliding scale discounts move up or down, depending on when the client pays the invoice. For example, a client may get a 10% discount if they pay the invoice 10 days before the due date, with the discount dropping each day until reaching 0% on the actual payment date.
3. Tailored discounts
It is also possible for businesses to tailor discounts depending on the client. For example, new customers may receive a welcome discount. Or, regular clients may receive discounts based on the length of time they have stuck by your company.
Discounts are a useful way to avoid late or missing payments. If you are having trouble collecting, it may benefit you to seek legal guidance.
