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I thought offering a discount for early payment was a bad idea, but my numbers say different.
For years, I refused to put a 2% discount for paying within 10 days on my invoices. I figured it was just giving money away and people would pay late anyway. Then a big client in Tampa asked for it, so I tried it for a quarter. My average payment time dropped from 45 days to 12 days across all my projects. That cash flow boost was worth way more than the small discount I gave out. I'm still surprised it worked so well. Has anyone else seen a real change after adding a simple early pay discount?
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iris_barnes8711d ago
Yeah, you gotta stick with the late fee part too or it falls apart. We did the 2% discount thing but only saw real change when we started charging the full amount if they missed the 10 day window. It feels awkward at first, like you're being mean, but it's just business. Clients learn real fast when they see that extra charge on the next invoice, lol. That combo of carrot and stick is what makes the cash flow steady.
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jana50912d ago
We ran a 5% net 30 discount for our biggest wholesale accounts. The trick is you have to enforce the late fee on the back end. We had one client who kept testing it, so we added the full late charge to their next invoice. They paid on time for the next six months straight. That consistent cash flow is better than chasing payments.
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